Thursday, February 14, 2019

Mortgage Options With No To Low Down Payment

Many people delay buying a home until they have saved 20% for there down payment. That is not necessary with several No to Low Down Payment options available to home buyers.

It’s true if you put down 20% your payment will be lower, but most don’t have that much in savings and if you do, do you really want to spend it all and put your financial health at risk. If you are like most people saving is very hard. Doesn't mean you can't make a monthly house payment. Putting off buying until you can save 20% will most likely cost you more with increasing home values and increasing mortgage rates. Here are a few loan programs that are available now. 

USDA – United States Department of Agriculture Rural Housing Loans offers 100% financing. You will be surprised to hear it’s not just a farm loan. You can use USDA home loan on many types of property, like condos and townhomes as well as residential homes. You can plug in any address to see if the property qualifies at USDA Property Look-up

USDA does have income limits, but most people will qualify. You can see if your income meets the requirements here USDA Income Limit- Look-up

Mortgage insurance is much lower on a USDA home loan, making this loan the most affordable home loan option.

VA Home Loan offers 100% financing for members of the Military and their surviving spouse. VA guarantees the loan and will repay the lender making the loan if they have met the VA guidelines.
There is a VA funding fee that is financed within the loan and all closing costs can also be incorporated into to loan. Making this a true 100% loan. There is NO mortgage insurance on a VA home loan.
The 2019 VA loan limit increased to $484,350 from $453,100 except in 199 high cost counties where they are higher. You can check out the loan limits by county

FHA – Federal Housing Administration is the largest mortgage insurer in the world, offering a 96.5% loan with 3.5% down payment. There is mortgage insurance (MI) of 1.75% upfront that is added to your loan and a monthly MI of .85% if the loan is at 96.50%. MI will remain on an FHA loan for the duration of the loan. You will need to refinance or sell to cancel the MI. Seller can contribute up to 6% of the loan amount as a credit, this can be used to cover your closing costs but not your down payment. Your down payment can be gifted completed or partially by a relative or third party.

If a lender funds according the FHA guidelines, then FHA will guarantee the loan making qualifying a bit easy with lower credit scores down to 580 for most lenders.

Fannie Mae Home Ready Loan Program with 97% financing with a 3% down payment. A great alternative to FHA.   Income limits do apply and you can look them up here Income Limit Look-up 

This loan program does require Mortgage Insurance but once your home has 20% equity you can request it to be removed, unlike FHA.  

There is a homebuyer education requirement to insure you know the process and what to expect financial as a new home owner. You can take this course online or in person.

Freddie Mac Home Possible offers 97% financing with a 3% down payment. This product feature very similar guidelines as the Home Ready program. MI can be removed once equity reaches 20%. Non- occupying co borrower is allowed on a 1-unit residence. Now you can even add sweat equity for your down payment and closing costs.  

 No income limits in low-income census tracts, and otherwise limited to 100 percent Area Median Income (AMI). No geographic limits on loan amounts. Use the Home Possible Income & Property Eligibility Tool to see income limits for specific properties or submit to Loan Product Advisor® to determine Home Possible income eligibility.

This is another great option for the right buyer.

Conventional Financing at 97% with a 3% down payment is another option with all the same guidelines as a normal conventional loan but it will have mortgage insurance based on your fico score, debt to income ratios and property zip code.  

Down payment assistance programs are also available in most cities, counties and states. Check your state and local area to see what is available and what guidelines are required. You will be surprised that most people will qualify for some type of assistance. Need help give me a call.

To get started to see if you qualify for any of the loan programs go to and click on apply. Once you complete the application, I will give you a call. If you want to call me first, please do!

 For more information please contact me at 808-457-2455.

Thank you for visiting my blog, I encourage you to leave a comment or questions. Let me know if my blog has helped you. I would love to hear your thoughts and any ideas for future posts.

Roxy Redenbaugh
ACMC Loan Consultant
Mortgage Coach
Branch Manager
NMLS #269926

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