Buying a house in St. George Utah involves a huge financial commitment. Thus, many people are left to borrow a mortgage in order to finance their homeownership dream. To qualify for a conventional home loan, you have to raise the 20% down payment, raise closing costs, and have a high credit score. For first-time buyers, paying the down payment and closing costs can be overwhelming. Thus, regardless of having a good credit score, many people are still locked out from homeownership.
Are you struggling to raise enough down payments to qualify for a home mortgage? Do you know that you can easily buy a house in St George with a low down payment or even no down payment? In this post, we share important tips to help homebuyers into homeownership even with low or no down payment.
1. Explore Available Mortgage Options
There are several mortgage options available today. Each has its own set of pros and cons. For first time buyers looking to buying a house in St. George with a low down payment, talk to a mortgage broker to help you understand available options. Thus, you may want to consider the following options:
- The Conventional Mortgages with Low down payment
First-time homebuyers with the required credit score can get a conventional mortgage with a low down payment. This is often as low as 3% depending on personal situation and lenders terms. In addition, the property you are purchasing will inform the mortgage lenders whether to consider the borrower for a conventional home loan with a low credit score.
However, bear in mind that paying less than 20% on the conventional home loan may require payment of the private mortgage insurance. Private mortgage insurance is what protects the mortgage lender in case you default on a mortgage. Note that private mortgage insurance is normally paid as part of the monthly mortgage repayments.
The other requirements to qualify for a conventional home loan with low down payment include a high credit score, a debt-to-income ratio of not more than 50%, and a loan amount that must fall within the set limits.
- The FHA Home Loan
The Federal Housing Administration issues mortgages to borrowers who can raise a 3.5% down payment. Thus, the FHA home loan is considered a low down payment mortgage. To qualify for the FHA backed loan, you need a credit score of 580 or above. If your credit score falls between 500 and 579, you can still borrow this low down payment mortgage. However, you have to raise up to 10% down payment.
- The VA Home Loan
Guaranteed by the Department of Veteran Affairs, The VA home loan requires no down payment. The VA home loan assists applicants to build, buy, or improve a home, or even to refinance the current home loan. The VA home loan is available to active servicemen or women and their surviving spouses. However, the applicants should meet the credit score requirements.
- USDA Home Loan
This is a zero down payment home loan for rural and suburban buyers. Ideally, the mortgage option is suitable for the borrowers who are not wealthy and cannot qualify for the traditional mortgage. To qualify for the USDA home loan, you ought to have a dependable income and provide proof that you will keep to date with the mortgage repayments.
2. Consider the State or Local Homebuying Assistance Programs
In addition to the federally backed home buying programs, the state of Utah offers some assistance programs suitable for homebuyers who cannot raise a 20% down payment. The State-backed home buying programs are suitable for buyers with limited income but have a decent credit score.
Borrowers can apply through the statewide network of the participating lenders. Contact your mortgage lender to find out the available programs. However, be aware that the state-backed programs put restrictions on income, property purchase price, and the home location.
3. Compare the Mortgage Lenders Requirements
Shopping for mortgage lenders is always recommended. You will find that mortgage lenders will have varying requirements to be met by the mortgage borrowers. In that regard, check their requirements in terms of mortgage down payment. The idea is to choose a mortgage lender who is willing to lend at favorable terms that include a low down payment. However, bear in mind that the mortgage lenders might introduce a high mortgage interest rate in order to accommodate the low down payment requirements.
4. Stick To Your Budget
The down payment amount will also depend on the value of the property you are purchasing. The higher the property value, the higher the down payment that you will have to make. Therefore, you may consider revising the amount you intend to spend on buying a house in St. George, just to be sure you pay a lower down payment.
Now, you know the options to pursue in order to afford a house in St. George Utah with a low down payment. Talk to your mortgage lender for different options.