Can you actually Buy a Home with a Low Downpayment?
Buying with a Low Downpayment.
Many people have heard for years that in order to purchase a home, you’ll need a 20% down payment. However, this hasn’t been so for quite some time. As a matter of fact, 1.5 million Americans have purchased a home with a down payment of less than 10% in the last 12 months. Actually, this is the highest percentage of low down payment home purchases in 7 years.
When you make a down payment of 20% (or more) you’ll avoid paying Private Mortgage Insurance. You see, lending institutions want to protect their investment in you, the buyer. With a 20% down payment, even if the home prices fall dramatically, they feel there will still be equity in the home to protect them. However, if the alternative is paying the PMI or not owning a home, many are opting to pay the PMI.
What Are the Options?
The government entities, Freddie Mac or Fannie Mae offer many mortgage programs which will allow you to purchase your dream home with as little as 3% down.
Another option is an FHA backed mortgage, which requires as little as 3.5%. And, if you’re a Veteran, you may qualify for a VA mortgage, which requires no down payment.
Your credit history is the more important factor in purchasing a home, not the size of your down payment. However, the borrower needs to meet the federal guidelines for income requirements.
Many first-time home buyers have the income, and have good credit. As a result, they’re able to purchase a home since they don’t need to save up that large down payment. If you haven’t saved the 20% yet you shouldn’t let that stop you from buying your own home now. So, speak with a mortgage representative to get Pre-Approved. Then call us, Bunny and Art Reiman so that we can help you find your new home.
Would you like to see more homes for sale in Monmouth County?
Related Blog Posts