For the majority of first-time buyers, saving for a down payment is considered the most difficult step in the home-buying process. However, it’s actually a common misconception that you always need 20% down to purchase a home.
First-time home buyers: You’re even closer to a down payment than you believe
Here’s the lowdown on the more popular low-down alternative payment options: FHA Loan – Traditionally the mortgage preferred by first-time buyers, the Federal Housing Administration (FHA) offers government-insured loans with as little as 3.5% down.
The most well-liked FHA loan option, the 203(b), is widely available from lenders throughout the country. It’s possible you’ll qualify with a credit score of just 500, however, there could possibly be limitations on some condo purchases. Home Possible from Freddie Mac – This program lets you put between 3 and 5 percent down, provided that you shall use the home as your primary residence, and don’t currently own or share ownership of another house. Then of course you’ll have to complete a required home-ownership education program online.
Conventional 97 from Fannie Mae – Just 3% down is sufficient to assist you to qualify for a Conventional 97, as long as you’re applying for a fixed-rate mortgage on a single-family home that’s under $417,000. You’ll also need to take part in a home-ownership education program, and at least one of the purchasers applying for the loan has to be a first-time buyer. HomeReady from Fannie Mae – Another option that will require as low as 3% down, HomeReady may also offer below-market home interest rates.
Additionally, this program allows non-occupant borrowers to apply. For example, parents can secure this kind of loan for a young adult who’s just beginning to establish credit.
To talk about the best option for you and to get a jump start on your home search, contact Nick, Cindy & Nicholas Davis with RE/MAX Premier Group, we have lenders ready to assist you with which option would suite you best.