You’ve been hearing it for ages now it’s a great time to buy a home! Interest rates are still historically low and there is a good selection of homes on the market to choose from. Still, you may be hesitant because of some common myths related to down payments. After debunking these myths, you may learn you’re better prepared to buy a home than you thought.
#1 You do not need a 20% down payment to get a mortgage!
This is perhaps the biggest myth about buying a home, and it is not true! Today borrowers can get a conforming, conventional mortgage with a down payment of as little as 5% and FHA mortgages require only 3.5%. The most recent National Association of Realtors profile shows that 40% of repeat buyers and 66% of first-time homebuyers are putting less than 10% down. (Of course the USDA RD loan and VA loan are $0 down payment programs)
#2 Low down payment options are not limited to first-time homebuyers.
While there are a few programs for first time homebuyers, most low down payment options are available to all qualified homebuyers. Lenders will look at your credit history and other factors to determine if you qualify.
#3 Down payments do not have to come out of your own pocket.
Gifts – Depending on the program, qualified borrowers can further reduce the down payment coming out of their own pockets by lining up gifts from family. Grants or loans from non-profits or public agencies are also options.
Down payment assistance – Every state, and many cities and counties, offers down payment assistance programs for qualified borrowers. A directory of these programs is available online through the U.S. Department of Housing and Urban Development (HUD) .
You have choices when it comes to your down payment so give me a call and let’s talk about what makes the most sense for you.
This is Part 1 of a series – click here to see Part 2, click here to see Part 3