Popular Low Down Payment Options

Popular Low Down Payment Options

buying a home

Buying a home is within your reach!

Owning a home has always been a big part of the American Dream.  For most prospective first-time buyers, saving enough for a down payment is the hardest step towards achieving this dream.  Contrary to popular belief, however, you do not need to put down 20% to secure a home!  Here are four of the most popular low down payment options available to home-buyers today:

FHA Loans

The traditional mortgage of choice for first-time buyers.  The Federal Housing Administration’s “203(b)” offers government-insured loans as low as 3.5 percent down.  You may qualify with a credit score of only 500!

Home Possible from Freddie Mac

This program lets you put between 3% – 5% down, as long as you intend to use the purchased house as your primary residence, and don’t currently share ownership of another house.  You’ll need to complete an online homeownership class for this one.

 

Conventional 97 from Fannie Mae

3% down will qualify for a Conventional 97, so long as you’re applying for a fixed-rate mortgage on a single family home less than $417,000.  This one also requires an online homeownership class.

 

HomeReady from Fannie Mae

Another option that requires as little as 3% down.  This program allows non-occupant borrowers to apply.  For example, parents can secure this loan for a young adult who has not yet established credit.

 

There are a few things to keep in mind when considering your loan options.  Putting less than 20% down can result in an additional monthly cost of Private Mortgage Insurance (PMI).  If your home value is appreciating, however, PMI can be eliminated in a few years through refinancing.  On the up-side, buying a home with a smaller down payment can leave you less likely to become “house poor”, with more cash in your pocket to for emergencies and home improvements!

 

four popular low down payment options

Source:  First-time homebuyers: You’re closer to a down payment than you think