While offering you a home mortgage loan, a mortgage lender takes into consideration various things, such as your credit history, income, down payment amount etc. All these things are very important in determining your eligibility to obtain the home mortgage loan. Sometimes, the down payment amount creates a big problem to homeownership for many home buyers. The problem of making big down payment gets compounded especially for the first time home buyers and for the borrowers in low income brackets.
Down payment requirements vary from lender to lender. Some lenders may charge cash down payment of 5%, whereas some lenders may charge 20% down payment of the home sale price. Even some lenders may not charge down payment at all. If you make high down payment, you can get approval for a home mortgage loan even with a poor credit score. If you make more than the down payment required (if you make 25% or 30% down payment), your lender may overlook your credit blemishes. In that case, your lender may approve you the mortgage loan without verifying your income. Again, if you make less than 20% down payment, you may have to obtain private mortgage insurance (PMI). The PMI offers protection to the lenders from the risks of default.
Anyways, for majority of the loans, down payment is required. No conventional loan is available without a down payment of at least 3% to 5% of the home price. Some mortgage loans such as VA loans, USDA Rural Development Housing Loans are available with no down payment.