I feel like one of the major concerns, especially with first time buyers, is saving up for their down payment. Yes, saving for a down payment is a lot of money but there are SO many options out there to help. Of course, the actual amount you need to have depends on the type of loan you are getting and the purchase price of the home.
I wanted to highlight a little bit of an article from The Mortgage Reports that talks about how much money you need for a down payment with different types of loans. If you want to read the entire article, which I highly recommend, please click here.
How Much Downpayment Is Required To Buy A Home?
As a first-time home buyer, you have access to a wide range of mortgage loans and mortgage loans can be customized to meet your needs.
Your loan amount is one of your choices.
The downpayment can be as large as you wish, or as small — so long as you make the minimum investment required by your lender.
The five most-common low- and no-downpayment mortgages used by first-time home buyers are the FHA loan, the VA loan, the USDA loan, the Conventional 97, and the HomeReady™ mortgage.
Each is described below.
The FHA Loan
FHA loans require a downpayment of 3.5% of a home’s purchase price, at minimum.
These products are popular with first-time home buyers because the program allows below-average credit scores.
FHA mortgage approval standards are considered to be the most friendly toward first-time buyers.
The VA Loan
VA loans are available to members of the U.S. military and veterans of the Armed Services.
These mortgages provide a 100% financing option, and VA mortgage rates are often lower than those of other programs.
The USDA Loan
Rural Housing or USDA loans also allow 100% financing. The program is available for homes in rural areas and less-dense suburban neighborhoods nationwide.
USDA mortgage rates are often as low as VA mortgage rates.
The Conventional 97
The Conventional 97 is available to home buyers with above-average credit scores. A Conventional 97 loan allows buyers to receive cash gifts for their downpayment, which is only 3%.
This program has a loan size limit of $424,100.
The HomeReady™ Mortgage
The HomeReady™ mortgage is another 3% down program. This program is geared toward multi-generational households, but all home buyers are welcome to apply.
Home buyers using HomeReady™ get access to discounted mortgage rates, and can use the income of boarders and other household residents to help get mortgage-qualified.”
If you are in the market of buying a home, I highly suggest talking with a lender and discussing your options. Get a plan for your downpayment, get a pre-approval letter and let’s find you a house!
If you have any questions or don’t know where to start give me a call. 360-483-6490