That means some put 20% down and some put $0 down
The 20% down myth has caused many would be home owner's to not even apply
Everyone from so-called financial experts, parents, college processors
and even real estate agents have pitched 20% down as a wise move but is it?
If you have 20% down in your bank, Are risk adverse (do not like investing your $$) and want to spend $40,000 upfront to save under $100 a month then yes 20% down may be your best option when investing in Real Estate, but for the Average First time home buyer even saving up 20% down can take months and in most cases years. During that time you are still paying rent, watching the homes you could be living in appreciate and most importantly still at the mercy of your landlords constant rent raising.
How to buy a house without 20% down
The 20% down payment myth is still circulated to this day because you need 20% down on most loans to Avoid PMI or private mortgage insurance. You are not alone if you want to buy a home with less than 20% down, 70% of non-cash first time home buyers and 54% of all buyer's made down payments of less than 20% over the last 5 years according to the National association of Realtors. 60% of First time home buyer's put down 6% or less, even more troubling is that only 13% of of adult ages 34 and younger realize you van buy a house with a down payment of 5% or less.
The FHA Mortgage requires just 3.5% down and that down payment can come in the form of a Gift from a family member. An FHA loan can be used to buy a Single Family home, a Duplex, Triplex, and even a
4-plex which is a great option for a long term investment especially on your first home.
A VA Loan is arguably one of the best loan products out there, with good reason. Our veterans served our country and the least we can do is help them get into a home with the best rate and terms possible. The link to our in depth article on VA loans can be reached by clicking here. VA loans are the only low Down-payment loans that do not have any PMI or Monthly Mortgage Insurance. They are also one of the most competitively priced loans available. If you are a veteran and unsure if you are eligible for a VA loan Give us a call or send us a message and we can Check your eligibility for free.
Conventional loans also offer down payments as low as 3% with a few Different options
- HomeReady™: Allows non-borrowing household members to contribute toward qualifying income. Also, use roommate income and mother-in-law unit rental income to qualify
- Home Possible® Advantage: A Freddie Mac 3 percent down loan offering reduced mortgage insurance
- Conventional 97: Fannie Mae’s low down payment loan with no income limits and no first-time buyer requirement
USDA Loans require No Down payment and Finance 100% of your Loan to Value or LTV. Property eligibility is location based but it is available outside of most major Metropolitan area's or suburbs. 97% of our nation's landmass is elgibile so if you are interested in eligiblity requirements click the link at the beginning of this Paragraph.
What about closing costs?
Keep in mind that someone will pay closing costs even if you select a loan program with no down payment required. The good new's is closing cost's don't have to come out of your pocket and in many case's the seller can pay for then using Seller Concessions. Although every file is different we have helped many clients close on loans who have not had to bring any out of pocket closing costs. The best thing to do is Give us a call or send us a message and discuss your best option to get into a home this year.
Looking for some more Loan information? Check out the Article below
USDA Home Loans