Is the down payment the only thing standing between you and a home in Danvers? You are not alone. Many North Shore buyers wonder what they really need to save and how loan programs change that number. In this guide, you will learn the most common down payment options in Danvers, how they affect your monthly payment, and what your total cash to close might look like at different price points. Let’s dive in.
Down payment options at a glance
Conventional loans
Conventional loans can allow as little as 3% down for eligible first-time buyers or specific programs. If you put less than 20% down, you will pay private mortgage insurance (PMI). PMI varies by credit, down payment, and insurer. It is often cancellable once you reach about 20% equity. Stronger credit and a higher down payment can lower your PMI cost and interest rate.
FHA loans
FHA requires a minimum 3.5% down if you meet credit and program rules. You pay an upfront mortgage insurance premium that is often financed into the loan, plus an annual mortgage insurance premium in your monthly payment. FHA can be more flexible on credit and debt-to-income, but mortgage insurance usually lasts longer than conventional PMI.
VA loans
If you are eligible as a veteran, active-duty service member, or certain surviving spouse, VA loans can allow 0% down. There is no monthly mortgage insurance. A one-time VA funding fee may apply and can often be financed. VA loans offer strong borrower protections and flexible underwriting.
USDA loans
USDA financing can offer 0% down in eligible rural areas. Danvers is generally more suburban and may not qualify. If you are curious, you can review program eligibility maps during preapproval.
Jumbo loans
If your purchase price is above conforming loan limits, you may need a jumbo loan. Jumbo programs often require 10% to 20% down, higher credit scores, lower debt-to-income, and larger cash reserves. Rates and terms vary by lender. PMI works differently for jumbo loans, so expect stricter requirements.
Danvers costs that affect your cash
Down payment is only one part of what you need to bring to closing. In Massachusetts, closing costs commonly range from 2% to 5% of the purchase price depending on lender, title, and attorney fees. You also fund prepaids and escrows, which are typically about 0.5% to 1.5% of the purchase price for property taxes, homeowners insurance, and interest.
For Danvers, also consider:
- Property taxes and the initial escrow deposit for taxes and insurance.
- Whether the home is in a flood zone or has higher insurance needs.
- HOA or condo fees that impact monthly costs and sometimes lender reserve requirements.
- Two- or three-family properties that may have different down payment and underwriting rules.
- State and local assistance options such as MassHousing and municipal programs that may help with down payment or closing costs for eligible first-time buyers.
Cash-to-close examples in Danvers
The examples below are illustrative to help you plan. Your actual numbers will depend on your lender, credit, and the property. Assumptions used here: closing costs at 3% of purchase price, prepaids at 1%, and a typical earnest money deposit credited back at closing. For conventional PMI examples, an illustrative 0.8% annual rate is shown. Speak with a lender for a written Loan Estimate.
Scenario A: Entry or condo purchase at $400,000
Conventional 3% down:
- Down payment: $12,000
- Closing costs (3%): $12,000
- Prepaids (1%): $4,000
- Earnest money credit: -$5,000
- Estimated cash to close: $23,000
- PMI example: about $259 per month
FHA 3.5% down:
- Down payment: $14,000
- Closing costs: $12,000
- Prepaids: $4,000
- Earnest money credit: -$5,000
- Estimated cash to close: $25,000 when the upfront FHA premium is financed
- If you pay the upfront FHA premium at closing, add about $6,755 for a total near $31,755
VA 0% down for eligible buyers:
- Down payment: $0
- Closing costs: $12,000
- Prepaids: $4,000
- Earnest money credit: -$5,000
- Estimated cash to close: $11,000 if the funding fee is financed
Scenario B: Mid-market single-family at $650,000
Conventional 3% down:
- Down payment: $19,500
- Closing costs: $19,500
- Prepaids: $6,500
- Earnest money credit: -$7,500
- Estimated cash to close: $38,000
- PMI example: about $420 per month
FHA 3.5% down:
- Down payment: $22,750
- Closing costs: $19,500
- Prepaids: $6,500
- Earnest money credit: -$7,500
- Estimated cash to close: $41,250 when the upfront FHA premium is financed
VA 0% down for eligible buyers:
- Down payment: $0
- Closing costs: $19,500
- Prepaids: $6,500
- Earnest money credit: -$7,500
- Estimated cash to close: $18,500 if the funding fee is financed
Scenario C: Upper-tier purchase at $1,100,000
Conventional 3% down:
- Down payment: $33,000
- Closing costs: $33,000
- Prepaids: $11,000
- Earnest money credit: -$10,000
- Estimated cash to close: $67,000
Jumbo loan expectations:
- 10% down example:
- Down payment: $110,000
- Closing costs: $33,000
- Prepaids: $11,000
- Earnest money credit: -$10,000
- Estimated cash to close: $144,000
- 20% down example:
- Down payment: $220,000
- Closing costs: $33,000
- Prepaids: $11,000
- Earnest money credit: -$10,000
- Estimated cash to close: $263,000
- 10% down example:
FHA loan limits may exclude higher-priced purchases, so FHA often is not an option at this level.
How down payment changes your monthly
When you put less than 20% down on a conventional loan, you usually pay PMI. That increases your monthly payment until you reach enough equity to request cancellation. A larger down payment reduces your loan balance and can lower your rate and PMI cost.
FHA adds an upfront premium and an annual MIP. The annual MIP usually lasts longer than conventional PMI and can remain for the life of the loan at higher loan-to-value. VA does not have monthly mortgage insurance, which helps the payment even with zero down.
A simple way to compare is to ask your lender for side-by-side estimates at 3%, 5%, 10%, and 20% down. Look at the payment difference, PMI or MIP cost, and how quickly you build equity. For many buyers, moving from 3% to 5% or 10% down can meaningfully lower monthly cost.
First-time buyer help in Massachusetts
Massachusetts programs, including MassHousing and some municipal options, sometimes offer down payment assistance, closing cost help, or special first mortgages for income-eligible or first-time buyers. Availability, income limits, and purchase price caps change often. If you qualify, assistance can bridge the gap between your savings and a competitive offer in Danvers. Your lender and buyer agent can help you review current options and eligibility.
Smart next steps for Danvers buyers
- Define a budget using current Danvers prices by property type. Pick one or two likely price points to model.
- Get prequalified with two or three local lenders. Ask for Loan Estimates at different down payment levels and loan types.
- Request exact PMI quotes for conventional loans and confirm whether FHA or VA upfront fees will be financed.
- Ask about reserves. Some loans require you to keep several months of payments in the bank after closing.
- Explore assistance programs. Check state and local options to see if you qualify for grants or second-mortgage help.
- Align on property fit. For condos, confirm building eligibility for the loan type and review HOA financials early.
- Build a cash-to-close plan: down payment plus closing costs, prepaids, any funded fees, and your earnest money credit.
Ready to map your path to a Danvers home with clear numbers and local insight? Schedule a Free Consultation with Jill Michaud to compare scenarios, connect with trusted lenders, and start your search with confidence.
FAQs
How much down payment do I need to buy in Danvers?
- Many buyers use 3% down with a conventional loan or 3.5% down with FHA, while VA-eligible buyers can put 0% down; jumbo loans often require 10% to 20% down.
What are typical closing costs in Massachusetts for Danvers homes?
- A reasonable planning range is 2% to 5% of the purchase price for closing costs plus about 0.5% to 1.5% for prepaids and escrows.
How does PMI compare to FHA mortgage insurance?
- Conventional PMI is usually cancellable once you reach around 20% equity, while FHA’s annual MIP typically lasts longer and often remains for high-LTV loans.
Do condos in Danvers change my down payment or reserves?
- The down payment rules are the same by loan type, but some lenders require extra reserves for condos and will review HOA finances during underwriting.
Can I use gift funds for my down payment in Massachusetts?
- Many programs allow gift funds with documentation; some may require a minimum borrower contribution, so confirm details with your lender.
Are USDA loans an option in Danvers, MA?
- USDA programs target rural areas, and Danvers is generally not eligible; your lender can check the eligibility maps if you want to confirm.
