Traditional thinking is that someone needs 20% of the purchase price to put down to buy a home. Back many years ago when your only option was to deal with a conservative local bank that may have been the case but, over time things have significantly changed.
Let’s start with Traditional Conventional Financing. They offer products designed to help borrowers with a moderate income and good credit to achieve the dream of homeownership with as little as 3% down. There will be some MI (mortgage insurance) in your monthly payment when using a 3% down payment however in the past several years competition has helped drive the cost of MI down make it more affordable than ever. For borrowers that do not fit the moderate-income standards set for 3% down products then 5% down is still an option in this product line.
Next up is FHA. These products work with borrowers that may have less than perfect credit and are geared towards first time home buyers. They start at 3.5% down but you can combine a FHA loan with one of many Down Payment Assistance programs to lower or even eliminate the need for any down payment. There is MI with FHA as well but this product offers more options to more borrowers of every credit type.
Now on to VA. VA loans are designed for our past and present service members. In this program, you can achieve 100% financing and do this without having to pay any private mortgage insurance. This is a great program and should always be the place to start for all of our servicemen and servicewomen.
USDA is also a great no money down option. Here are some things that most people do not realize about USDA loans. They are not just for farmers, they do not require a down payment, there is MI but it is very affordable, way more of the US is eligible than anyone realizes and there are some income limits as to who can qualify. To see if the home you are looking at is eligible for a USDA loan try out this link or, just give us a ring and we can help you find out.
Jumbo loans can also be obtained with as little as 5% down. Loans over the conventional limit currently $510,400 are considered Jumbo loans. For years 20% was the norm but now due to increased competition, you can get that luxury home of your dreams for as little as 5% Down. Do you have 10% down on your dream home but you do not like the rates and or payments that come along with a 90LTV Jumbo purchase money mortgage? Give us a call about our co-investment option for Jumbo borrowers. We may be able to save you as much as $1000 a month in your monthly mortgage payment.
Last but not least comes a new wave of products called Non-QM. These loans are NOT subprime loans. They are all made with a careful eye on the borrower’s ability to repay and take into account any additional risks associated with these loans throughout their underwriting. They fill the gaps left behind by the products above. They are for borrowers that are self-employed that have great cash flow and money in their business but their tax returns show a small profit after all write-offs. They can also be for borrowers with less than perfect credit. Some of these products can still offer borrowers a chance at homeownership with as little as 10% or even 5% down.
If you want to learn more give me a call today.
Northeast Financial LLC