Happy Mortgage Monday.
If you're tired of renting and would like to buy a home to start building wealth for you and your family. But you’ve found saving for a down payment to be an obstacle. Keep reading this article is for you.
YOU DO NOT NEED A 20% DOWN PAYMENT
You don’t need a huge down payment to get a mortgage. Nor do you need a very high income or credit score. There are many low down payment home loan programs out there that make buying a house possible.
In this article we will explore 6 low down payment home loans designed to assist all homebuyers from low to moderate to high income. I reiterate all homebuyers.
The 6 home loan types we will discuss all have a low or no down payment. All the loan types require owner occupancy they are not for investors.
Home Possible - 3% Down Payment
Home Ready 1% - 1% Down Payment
VA Loans
A VA loan is a no money down mortgage program available to members of the U.S Military and their surviving spouses. VA loans allow for a high debt to income ratio (DTI) and do not require mortgage insurance (MI). If your realtor can negotiate seller paid closing cost then it's possible for you to get into a home with 0 to no out of pocket cost. Another great thing about this loan is you don’t need perfect credit, even a previous bankruptcy isn’t a problem.
USDA Loans
This little known home loan is commonly called a Rural Housing Loan. However, it can include people living in suburban and small town areas as well. This is because qualification basically depends on the population in the area.
The USDA loan is meant to assist low to moderate income homebuyers achieve their goal of home ownership. In order to qualify your household income cannot exceed the guidelines established by the USDA which is usually no more than 115% of the average area median income. Typically this is about $73,600 up to $103,400 in a high cost rural area. This loan allows eligible home repairs and upgrades to be included in the loan amount. The USDA loan is an excellent option for getting into a home with little out of pocket cost.
FHA Loans
The Federal Housing Administration (FHA) was created in 1934 to encourage homeownership.
FHA loans boast some great benefits such as : (1) Only 3.5% down payment; (2) Credit scores as low 500, but you need at least a 580 for the 3.5% down payment option; (3) Higher debt to income (DTI) ratios; (4) Short sales, foreclosures, or bankruptcies DO NOT disqualify you and (5) Down payments can come from gift funds or down payment assistance.
Home Ready Loans
Don’t have a lot of money for down payment but have average credit. An FHA loan is no longer your only option. Freddie Mac now offers a conventional loan called Home Possible. The benefits of Home Possible include: (1) Only 3% down payment; (2) Allows you to use income from all household members; (3) Down payments can come from gift funds or down payment assistance; (4) Reduced or eliminated monthly mortgage insurance (MI).
Home Possible Loans
Similar to Freddie Mac’s Home Ready Loan. Fannie Mae offers its own low down payment option it’s benefits mimic that of Home Ready they include: (1) Only 3% down payment; (2) Allows you to use income from all household members; (3) Down payments can come from gift funds or down payment assistance; (4) Reduced or eliminated monthly mortgage insurance (MI).
Home Possible 1% Loans
This is the Home Possible loan on steroids, it's for those of you that have excellent credit (need 720 credit score), but very little money or just don’t want to use all your savings for the down payment. They include: (1) Only 1% down payment; (2) Allows you to use income from all household members; (3) Down payments can come from gift funds or down payment assistance; (4) Reduced or eliminated monthly mortgage insurance (MI).
Down Payment Assistance
Our website at Blisssliferealty.com has information regarding various grants and programs. Remember, you DO NOT need to be low income to qualify for down payment assistance.
Bottom Line
Attaining Your Dream…
Purchasing your dream home may be more reachable than you think. There are plenty of low down payment home loan programs that help families become homeowners. If you want to purchase a home but are worried you will not be able to qualify because of little money. No need to fret, there are many options for you.
Speak to a lender and find out about your options!
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