The prospect of raising a 20% down payment has become a major hurdle. In fact, raising the down payment could delay the dream of home ownership by quite a few years, and I understand many families don’t want to, or simply can’t put those dreams on hold that long. As a result, many people are forced to continue paying monthly rent because they cannot afford a huge down payment on a home.
Don’t be discouraged! There are low down payment home loan options. If you are getting ready to purchase a property, you may be considering the no down payment or low down payment options.
The good news is that there are mortgage lenders requiring little or no money down to finance your dream of owning a home. Low to down payment mortgage allows first-time home buyers and repeat homebuyers to own a property by only covering the closing costs and possibly a small down payment.
Here are some of the options you may want to consider to make the homeownership dream a reality:
Available at as little as 0% down, the USDA home loan provides up to 100% financing on home mortgages.
The USDA home loan is also referred to as the Rural Housing Loan. As the name depicts, the USDA home loan is available to those willing to purchase a property in suburban neighborhoods.
The objective of the USDA home loan is to reach the low to moderate-income homebuyers by providing a mortgage at 0% down.
To qualify for the USDA home loan, the borrower’s income needs to meet various guidelines. As well as the property to be purchased should be located within an eligible rural area as determined by the US Department of Agriculture.
Advantages of USDA Home Loans include:
– Requires as little as low percent down payment.
– USDA home mortgages are available at interest rates lower than what the market offers.
– Features a lower monthly private mortgage insurance.
– Flexible credit guidelines.
2. The VA Home Loans:
The VA loan is another option available to first-time buyers at a low percent down! However, only members of the US military and their spouses are eligible to borrow under the VA loan.
The United States Department of Veteran Affairs guarantees the VA loan. If you are a retired veteran or a surviving spouse planning on buying a house in St. George, you can apply for a loan under the VA program. Unlike the USDA home loan, the borrower is not restricted to the areas where to buy a property.
The VA loans provide loan sizes of up to $765,600 for those buying properties in high-cost areas.
The VA loan and the USDA home loans are great for 0% down options.
Now, let’s go over some low down payment options:
3. The FHA Home Loan:
One of the low down payment options is the FHA home mortgage. Guaranteed by the Federal Housing Administration, the FHA home loan is available to borrowers at only 3.5% down payment.
You will still need to fulfill a set of requirements though, which are:
– Borrowers must provide a valid social security number and show they are lawful residents in the US.
– The FHA home loan is available for primary residence occupancy only. Not ideal for commercial, or rental usage of the property.
– The borrower should have a minimum credit score of 580 and a down payment of 3.5%.
4. The Conventional 97 Program:
Available from Fannie Mae and Freddie Mac, this is a 3% down payment program. It’s a great option for first-time homebuyers or low-income earners. The Conventional 97 mortgage is a less expensive option compared to the FHA loan that requires a 3.5% down payment.
The borrower also has the option of using gifted funds to pay the down payment for this particular loan.
For years FHA Loans have been first time home buyers only option, and though it has many wonderful benefits, Conventional 97 offers a better reality. It has no upfront mortgage insurance fees, & has cancellable monthly PMI.
5. The HomeReady™ Mortgage:
Created in December 2015, the HomeReady™ is backed by the US Government & Fannie Mae and available through a majority of lenders. The HomeReady loan comes from a line of Conventional loans that have been reduced to help aid low-income earners to buy or refinance.
The HomeReady™ permits income pooling from all household members, making it a very good option for helping those looking to purchase a property but cannot raise the high down payment required through a regular conventional mortgage.
Hopefully exploring your options & seeing that there’s the hope of homeownership, I hope you’re looking forward to finding & buying your dream home in St. George, Utah! The high down payment requirements should not stop you. Take advantage of the low down payment or low down payment options we offer here at Sun American Mortgage, where one of our amazing loan officers can help finance the dream!