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How Much Down Payment is Enough?

DB_Thought_Bubble

As we explore many topics about buying a home in our First Time Buyer Education Series, many have been wondering how much they need to save for their new home? It may not be as much as you think.

ZERO DOWN
The VA and the USDA both offer a zero down loan program for individuals and/or properties that meet their criteria. Sometimes, loans require little or no cash out of pocket. Some HUD properties are available with as little as $100 down.

3% DOWN
Some Fannie Mae Community and HomePath® programs allow just 3% down. You may even be able to fund your down payment through gifts, grants, employers, government agencies, unsecured loans from family or even with loans against CDs or retirement accounts.

3.5% DOWN
The FHA loan program allows as little as 3.5% down, and it is more lenient than most other programs on minimum credit scores.

5% DOWN
Fannie Mae / Freddie Mac conventional loans are available with down payments as low as 5%. The minimum changes based on property type, credit score, occupancy, etc.

Are you surprised at how low you may be able to go? While many believe a 20% down payment is required, you can see now that it’s far from the only option.

Whether you’ve saved a little or a lot, reach out to my team today, and we’ll work on finding a loan that works for you.

 

Things to Know Before Buying Your Home

Sold Home For Sale Sign in Front of New House

We all know the old line about location. But buying a home takes research, research, research, too.

You will want to determine:

How much you can comfortably afford. The pre-approval process, which entails full documentation and credit check, is the best way to determine the numbers that are right for you. Early in your search, you can identify any potential hurdles and focus only on homes truly available to you.

How much cash you need to close. Knowing how much cash you’ll need to close and, ideally, consolidating those funds into one account will help to prevent stress and ease the process later.

What kind of property you really want. Single family, multi-family, condo, co-op, Victorian, Colonial, Cape, split, ranch, cottage, cabin, teepee…home types and legal distinctions are plentiful. Whether you are open to several styles or have your heart set on only one, narrowing your search will save time and prepare you to act when the perfect home hits the market.

Where you want to be and how long you’ll want to be there. You’ll want to strike a balance between buying what you can afford and buying what will accommodate your needs for longer than just the first few years. Assess your plans for growing your family and how your income might grow to match. Planning ahead is especially important in today’s market, when trading up tomorrow may mean both a more expensive home and a higher mortgage rate.

How the process works. This is a time when the Internet doesn’t have all the answers. The process varies for many reasons, including area and custom. Generally, purchases include: Offer, Acceptance, Inspections, Contract, Loan Application, Appraisal, Title, Loan Approval, Closing/Funding and Moving In. Many little steps can fall in between, and the process won’t always occur in a given order. It pays to speak with local experts early. You can see a general overview of the process here.

Reach out when you’re ready, and we’ll help you understand the nuances of your market today.