The low down payment or no down payment home mortgage helps first time or buyers to experience the benefits of buying a house in St. George. Essentially, the home mortgage with no down payment allows buyers to purchase a home with no money required at closing except the standard closing costs. So, how does the low or no down payment mortgages work? In this post, we share critical tips for buying a house in St. George with low or no down payment.
1. Consider the Most Common government—Backed Loans.
Are you low on savings, and you cannot afford to pay the hefty down payments? Consider applying for government-backed mortgage loans. Offered by various mortgage lenders countywide, the government-backed mortgages could be your breakthrough when buying a house in St. George. Here are the joint government-sponsored options when it comes to buying a home with a low down payment.
● The Veteran Affairs Mortgage Loans
Commonly referred to as a VA home loan, this is a home mortgage with no down payment, available to active and former military and qualifying spouses. Often with a lower interest rate and friendlier terms than conventional home loans, the VA home loan requires no mortgage insurance. However, this type of mortgage comes with a funding fee to protect the mortgage lender in case of default. The exact funding fee depends on whether the borrower had a VA home loan in the past.
● The USDA Home Loan
The United States Department of Agriculture remains committed to helping home buyers in rural areas. This is through the no downpayment mortgage option. However, the mortgage borrower has to meet the income requirements to borrow under this mortgage type. Besides, note that there is no minimum credit score requirement, although a 640 or higher score typically qualifies for mortgage underwriting. To protect mortgage lenders against default, the borrower must pay an upfront funding fee equal to 1%.
● The Federal Housing Administration
The FHA home loan is a low downpayment mortgage type. The mortgage option allows borrowers with a credit score of 580 or above to qualify for a mortgage with just as low as a 3.5% down payment. For borrowers with a credit score of less than 579 but higher than 500, the down payment is set to 10%. The FHA home loan does not require private mortgage insurance to qualify for the mortgage.
Therefore, the above government-backed home loans could be your breakthrough when buying a house in St. George. Talk to a reliable mortgage lender near you for more options when it comes to buying a home with low or no money down.
2. Coddle the Credit Score
A high credit score unlocks the low-down-payment mortgage options. Besides opening your access to no down payment mortgages, a higher credit score could mean access to better interest rates on your mortgage. Note that credit score is not dependent on how much money you earn. It is based on how you manage past debt and how you manage your money. Therefore, check your credit score and fix any errors that could affect your low down payment home mortgages eligibility.
3. Consider Down Payment Assistance Programs
First-time homebuyers may qualify for the down payment assistance programs. These are programs started to provide grants and zero-interest forgivable or deferred payments loans. Therefore, if you want to become a homeowner, but you do not have enough cash to pay a down payment, consider the state or the local down payment assistance programs. The typical down payment assistant programs include:
- Grants
- Zero-interest or forgivable loans
- Deferred payments loans
- Low-interest loans
Therefore, talk to a mortgage expert near you for assistance in selecting the appropriate down payment assistance program.
4. Engage Professional Mortgage Broker For Advise
Did you know that a mortgage broker can help you find appropriate options when it comes to buying a home with zero down or low down payments? Mortgage brokers are essentially industry experts and help mortgage borrowers negotiate better mortgage terms. Therefore, through merely talking to a mortgage broker near you, you could unlock your access to low or no down payment mortgages.
5. Find a Home that suits Your Budget.
An expensive will require a more down payment and higher closing costs. You can avoid the high down payment by sticking to a property you can afford. This could mean forgoing some features you considered essential to your new home. However, bear in mind that the down payment is calculated based on the total cost of homeownership. Therefore, depending on how you look at it, your down payment percentage could be high.
Conclusion
Down payments do not have to stop your dream of buying a home. Consider the options we have explained here to help you purchase a property with a low down payment. Engage a mortgage broker near you for options on low to zero down payment mortgages.
