March 14th, 2018
When talking to renters who are considering making the leap to homeownership, there is usually one thing in particular that they say is holding them back: the down payment.
According to the National Association of Realtors, 87% of first-time buyers think they need at least 10% to put down to buy a home. That means they would have to save up $20,000 to buy a $200,000 home.
That simply isn’t the case.
In fact, 61 percent of first-time buyers made an average down payment of zero percent to 6 percent, according to the November 2017 REALTORS® Confidence Index Survey.
Of course, there are benefits to having 20% to put down, but it’s not at all necessary. There are loan programs to fit all needs, from putting zero down to 10 percent down.
Here are just a few of the options..,.
The FHA home loan is an extremely popular product, since it only requires 3.5% down. Like many low-down payment loans, the FHA program does require mortgage insurance premium and fees: 1.75% upfront and 0.85% of the loan balance per year. The upfront fee can be rolled into the loan amount.
The USDA home loan offers a zero-down mortgage option for those looking to buy outside the city. There are some income limitations, and buyers must pay 1.0% of the loan amount upfront, rolled into the loan, and 0.35% per year based on the loan balance for mortgage insurance.
The Conventional 97 is a 3% down conventional mortgage option from Fannie Mae. Mortgage insurance is based on credit score and typically ranges between 0.75% to 1.5% of the loan amount per year.
The HomeReady mortgage is another 3% down conventional option from Fannie Mae that has some income limits. Some applicants with strong credit scores qualify for lower mortgage insurance costs compared to the standard Conventional 97 loan.
The loan officers at Acadia Lending Group will work with you to find exactly the right mortgage product that fits your needs. Contact us today!