10 Mortgage Loan Types and Down Payment Schedules

Mortgage Loan Down Payment

How many times have you witnessed this scenario: customer wants to buy a house so he/she goes to the bank and applies for a housing loan, bank disapproves his/her application, the buyer goes to a mortgage company and borrows capital, the lender approves mortgage application, and finally, he/she purchases the house.

It’s just like in the movies, right? Seamless processes from start to finish are what the scenario above is trying to show us. But this is far from reality, though. What the example failed to show is how the buyer is to pay for the monthly amortization based on the type of loan applied for and how much is the initial payment to process the mortgage loan application.

In this blog, we will dissect the different types of loans involved in the procurement of your house and the amount you have to pay initially so that your repayments are scheduled properly and accurately.

Consider this as our “rough guide” to your loan options and down payment schedule to give you an idea of how different mortgage loans work and which of these will work best for you and your family.

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We have been discussing mortgages for quite some time now but have not dealt with down payments that form part of the contract. Our objective today is to briefly showcase the nuances of initial payments and how these affect your calculated interests and monthly amortizations.

When you apply for a mortgage loan and get approved, it doesn’t stop there. You also have to consider the amount of your initial payment so that the lending firm or the mortgage agency can properly give you an estimate of how much your monthly payment will be for a specific number of years.

After doing this procedure, your mortgage company will process your house purchase and will create your mortgage contract terms and policies.

(NOTE: The most common offers are 20% down and 5% down. These are better known as conventional loans and are most favored by most house buyers and lending firms in any part of the world.)

The following are the types of loans with their corresponding rates and down payments that your mortgage agent will interpret to help you decide intelligently:

a. FHA Loan DP: 3.5% – 10%
This loan requires a 3.5% (minimum) initial down payment provided you have a 580
credit score. Mortgage insurance, however, is a requirement for the duration of
the life of your loan.

b. USDA Loan DP: No down payment
This is a suitable loan if you are planning to buy a house in the countryside
with no downpayment and having only a 0.35% charge on your mortgage insurance

c. VA Loan DP: No down payment
You can avail of this loan if you are a veteran of the US military with no down payment.

d. 203k Loan DP: 3.5%
Also known as a home improvement loan, this is extended to house buyers as their
source of funding and it comes with an additional USD35,000 for repairs and/or
renovations. An interest rate of 3.5% down payment is required plus a mortgage
insurance fee amortized throughout the duration of your loan.

e. Conventional Loan DP: 5% – 20%
The most common mortgage loan on the market that does not require a mortgage
insurance provided you have at least a 20% down payment.

f. Conventional 97 Loan DP: 3%
A low downpayment loan for first-time house buyers that requires only 3% initial
payment. The remaining mortgage balance – 97% – represents the amount left
for amortization.

g. HomeReady Loan DP: 3%
h. Home Possible Loan DP: 3%
Both (g) and (h) share similar qualities: they are suited for first-time homebuyer
incentives Canada has to offer. This only requires a 3% down payment and house buyers’
income must not exceed 100% of meridian income.

i. Piggybank Loan DP: 10%
Also known as a “two-in-one” loan, this is actually an 80-10-10 loan deal: 80%
represents the amount of loan based on the house purchase price while the remaining
20 represent 10% from a second loan and another 10% for the down payment which
is derived from the borrower, respectively.

j. Jumbo Loan DP: 10% – 20%
The loan type is unique because this one exceeds set loan limitations in the home
buyer’s area. This loan has a higher borrower requirement compared to a typical
mortgage loan due to the higher risk involved and carries a 10% to 20% down payment as

This brief primer on the different low rates mortgages shows you, the borrower, the extent of how much is available for borrowing. The corresponding rates are computed based on your (a) credit scores, (b) house and lot buying price, and (c) ability to pay monthly amortization.

We can provide you with more detailed information on conventional loans since this is the most common type of loan extended to most homebuyers – first-time or otherwise.

However, our focus right now is to present you with choices that will help you determine which among these loan types and down payment options suit you and your real estate budget the best.


Buying your dream home is an exciting venture to look forward to. This represents your life’s achievement through years of careful financial planning and a prudent lifestyle.

However, there are other factors still to be considered just as important like your current credit score, financial capability, and your mortgage loan agreement.

Having a clear-cut understanding of the different mortgage loans available will likewise make it easier for you to cope with your down payments and succeeding monthly amortizations.

These serve as your road map to realizing your dream home in the most affordable manner with the least effort compared to buying a property without any idea of how and where to begin.

We are your trusted mortgage solutions experts based in Canada founded by Faizal Garasia in 2019. We have access to more than 90 lenders including the largest banks, credit unions, trust firms, and financial institutions across Canada.

We help you understand and resolve issues regarding mortgages, finances, taxes, and other loan-related payments that impact your real estate plans.

Contact us at (416) 825 0142 or send an email to faizal.garasia@dominionlending.ca today for more information.