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For most buyers, especially first-time buyers and those in lower income brackets the down payment presents the biggest obstacle to homeownership. For those Lenders have become more willing to underwrite mortgages with small down payments, for such people.
A cash down payment of 5 percent, 10 percent or 20 percent of the sale price is required by most mortgage lenders. But some of them have zero-down mortgage programs. Lender may overlook credit blemishes, approve your loan without verifying your income or both in case you put more than your lender requires. Before your loan is approved you may have to obtain private mortgage insurance, or PMI, to protect the lender in case you come up short on the down payment, with less than 20 percent of the buying price.
If you put more money, you can afford a more expensive house or lower your mortgage payment.

Lowdown on down payments

Say you make $40,000 annually. Your maximum monthly mortgage payment (28 percent of gross income) would be $933. Assuming your total monthly debt is no more than $1,200 (36 percent of gross income), the bigger the down payment, the more expensive the house you can buy.
Say the monthly mortgage payment of $933 has an interest rate of 7.5 percent. In a 30-year fixed-rate mortgage, that monthly payment covers a total principal of $133,435.45. With 10 percent down, that mortgage would cover a house worth $148,262. With 20 percent down, the house price would be $166,794.
Say you want to keep the monthly payment to $1,060.

30-year mortgage

Interest      Monthly             Affordable           Affordable                   Affordable                  Affordable
rate            payment           price with              price with                   price with                   price with
—————————— – -5% down             10% down                 15% down                  20% down

7.00             $1,060             $167,712             $177,029                  $187,442                   $199,158

7.50            $1,060              $159,578             $168,443                  $178,352                   $180,499

8.00           $1,060              $152,064              $160,512                  $169,954                   $180,576

8.50           $1,060             $145,113              $153,174                   $162,185                    $172,321

You can apply the equity as a down payment on the new home, in case you are selling a house.
Note: Don’t forget to include an estimate of closing costs in buying the property
Closing costs are mostly 3 percent to 5 percent of the sale price.

Now here are some tips to help you to succeed:

Your down payment should be ready at least 60 days before you apply for a mortgage loan.
Start saving now, and don’t buy expensive things.
You can borrow from family members and pay them back monthly.
Don’t despair in case you still come up short on the down payment. Some special mortgages and first-time homebuyer programs will help you buy your dream home.