How to Buy a House With Low to No Down Payment

How to Buy a House With Low to No Down PaymentOne of the factors that make it most difficult for individuals or couples to become homebuyers is coming up with a big down payment. Commonly, 20%, which is common at many banks, on a $100,000 loan is $20,000.

To some, that amount may as well be $100,000 because it’s almost impossible! Fortunately, there are many options available today for potential homebuyers.

Loan Options with Low or No Down Payment

Here are some excellent loan options that offer low or no down payments to eligible applicants.

VA Loan

Offered through the Department of Veterans Affairs, the VA mortgage loan is a zero-down loan available to current or former military personnel. Although applicants can put a down payment down if they so wish, there is no down payment required.

VA loans do not require excellent credit, and they offer 100% financing. They are even available to those who have been in the National Guard or Reserves for at least six years.

First time home buyers may be required to pay a 2.15% loan fee upfront. Mortgage insurance is not required with VA loans, which alone can save homebuyers hundreds of dollars.

FHA Loan

Offered through the Federal Housing Administration, the FHA loan is probably one of the most popular home mortgage loan types for several reasons. It only requires a 3.5% down payment, and the down payment can come from a gift or an approved non-profit organization.

Borrowers do not need good credit to be approved for an FHA loan. While this may vary by lender, credit scores typically can be as low as 580 with an FHA loan.

FHA loans do require two types of mortgage insurance. One type, 1.75% of the loan, is paid upfront, and the other type, 0.85% is added to the mortgage and paid each month. Mortgage insurance can be canceled when the home reaches 20% equity.

Another big benefit of FHA loans is that their interest rates are substantially lower than conventional mortgage loans.

HomeReady Mortgage®

Backed by Fannie Mae, the HomeReady Mortgage® is a conventional loan type that offers low down payments to eligible borrowers. Borrowers can pay down payments as low as 3%.

The HomeReady Mortgage® is not just for first-time home buyers, but is open to all buyers who meet the requirements. Although borrowers of all incomes can benefit from this mortgage, it’s aimed at helping those with low and moderate incomes.

Because this is a government-backed loan, borrowers also get lower interest rates. It’s typically for borrowers who have a household income 80% less than the median income in that area. The home’s census must meet certain requirements.

Home Possible Mortgage®

The Home Possible Mortgage®, which is backed by Freddie Mac, is a conventional mortgage loan that requires potential borrowers pay as little as 3 percent down payment. Borrowers can have less than perfect credit scores and can have income from non-traditional methods.

Although Home Possible Mortgage® is designed to help low-to-moderate-income home buyers, it’s open to all incomes as long as they meet the eligibility requirements.

When you’re ready to take the plunge, or even if you’re just thinking about it, stop and visit us or give us a call. Our loan specialists are First Choice Loan Services are always ready to help you and show you what we have to offer.

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2018 Increase in AZ Mortgage Loan Limits

Have you heard about the three major changes  in mortgage loan limits affecting our housing market?

Mortgage loan limits in AZ have gone up for 2018 across the board on Conventional, FHA, and VA. Here’s the great news…

  1. FHA Loan limits have recently increased from roughly $279,000 all the way up to $294,515, expanding the housing market and the opportunity for you to find the perfect home.
  2. Conventional Loan limits have gone all the way up to $453,100. Why is that a big deal? Previously, if you were above $424,000, you would have been forced into the jumbo financing arena. Now this is not the case – once again allowing you to finance more and perhaps find that perfect home for you.
  3. VA Loan limits have also followed suit with regards to conventional financing, allowing a veteran to finance as much as $453,100 with no money down and no private mortgage insurance required. This makes VA Loans some of the most, if not the most, competitive financing terms available for Veterans in the housing market.
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