Oh, that darn down payment. The reason a lot of people simply cannot buy a house. That down payment is a huge amount to save up for a put down on a house and unfortunately is one of the main reasons many people do not move from renting to buy.
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But, there are a lot of other options when it comes to coming up with a down payment. Yes, you do need a little bit of money in order to make a down payment on a home, but this is simply smarter financial management. If you have zero money in the bank, zero money saved, and nothing on the horizon, it simply may not be a good time to buy a house. That being said, you don’t need tens of thousands of dollars to buy a house either. There are a lot of different programs nowadays that can offer down payment assistance, gifts or just low down payment options.
As a renter, the rent costs in our area are skyrocketing faster than anything in this can be almost impossible for renters to save up enough for a down payment.
Here are some great ways to find a down payment and utilize some of the programs available to you:
Conventional 1% with equity boost loan program.
We talked about this a few weeks ago. This a new program offers a low down payment of just 1% of the purchase price and it is not FHA backed. This conventional loan is a good alternative to FHA 3.5% payment programs that already are in existence. However, there are some eligibility requirements. This is designed for borrowers that have high credit scores and can allow for more money at closing to leave room for upgrades or improvements. These conventional loans offer a 30 year fixed program and can be closed within 30 days or less. These are also available with a no monthly mortgage insurance premium requirement. The qualifications state that the borrower must have a credit score of 700 and a maximum debt to income ratio of 43%. This plan must also be for a primary residence purchase, not a rental or a second home.
The FHA 3.5% loan. (or 3%)
The FHA increase to their 3% loan a couple of years ago to 3.5% down payment but in 2016 there was a new option for 3% down payment option. The documentation and eligibility is the same for a conventional loan but your credit score can be under 680. There is a maximum amount of loan you can receive for this in both 15-year and 30-year fixed-rate mortgage terms are available.
A gift of a down payment.
You can receive a gift for your home loan down payment but it cannot be a loan itself. Lenders do not want to see you take on any more debt than you already have when you apply for the home loan.
The HomeReady Program.
This program is one of the newest by Fannie Mae. Is designed to help today’s homebuyers that are either low to moderate income and have decent credit histories. This allows people in lower income neighborhoods and minority heavy areas to get easier access to low down payment mortgages using today’s current interest rates. This program has a 3% down payment, but it also allows the entire household to pool their income together as a basis for income eligibility. There are certain requirements, but it might be a great option in order to come up with a very low down payment.
There are a lot of programs currently on the market and available to help renters get out of the rental market and into home ownership. You might be surprised at how easy the process is. However, you’ll never know unless you call.
I look forward to talking with you today about potential down payment options, different loan programs and how we can help you move from renting to buying.
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