Mortgage Myth: “I’ll need a lot of cash in order to buy the home I want. I’ll never be able to save up enough money for a down payment.”
Your actual down payment amount will depend on what type of loan you qualify for and a variety of other factors. There are many loan products and programs designed to help home buyers who don’t have enough saved up for a substantial down payment.
The Low Down on Down Payments
A down payment is the money that you pay upfront and outright toward the purchase of a home. The idea behind making a down payment is that your initial investment will give you incentive to continue making mortgage payments over the life of the loan. Generally, it’s a good idea to put down as much as you can comfortably afford. A larger down payment can often reduce the amount of your monthly mortgage payment and the amount of interest you’ll pay overall.
Your actual down payment amount will depend on what type of loan you qualify for and a variety of other factors. Keep in mind that if your loan-to-value ratio is more than 80%, you will likely be required to pay private mortgage insurance (PMI). PMI is required for borrowers with a down payment of less than 20%. It works to protect the lender should you stop making payments on your home loan. The cost of PMI varies and will depend on your down payment amount, credit score, and insurer.
Special Loan Programs
For some home buyers, saving up for a substantial down payment isn’t realistic. The good news? There are many programs out there designed to help qualified buyers who don’t have a large sum of money saved up for a down payment. We’ve outlined just a few of the loan programs available through Summit Mortgage Corporation.
FHA Home Loans: Federal Housing Administration (FHA) home loans are a great option for first-time home buyers who haven’t been able to save up enough for a down payment or have had credit issues in the past. The FHA home loan requires a low down payment, which is a more feasible option for some. Click Here to learn more about FHA home loans.
VA Home Loans: Veterans Affairs (VA) home loans are special home loans for United States service members, veterans, and eligible surviving spouses. These home loans require ZERO down payment and do not require PMI. To learn more about VA home loans, Click Here.
USDA Home Loans: U.S. Department of Agriculture (USDA) home loans are offered to home buyers with low-to-moderate incomes who want to purchase property in a designated rural area. These home loans require ZERO down payment. Click Here to learn more about USDA home loans.
You have options when it comes to home financing. Find out if you qualify for one of the special loan programs above, which offer low or ZERO down payment options! Contact one of our experience Senior Mortgage Bankers today to learn more. Give us a call today!