Have you been looking around for homes to make the biggest decision of your life? If you’re a tenant who’s tired of paying someone else’s mortgage, this is the right time to pursue the American dream of owning a home. As per the standards set by the mortgage industry, 20% down payment is considered the benchmark for appearing strong on paper for a home buyer. Given the fact that it’s a general rule for financial strength, it is by no means a prerequisite, nor is it essentially projected.
DOWN PAYMENT OPTIONS
Let’s consider that you don’t have 20% down payment for buying a home. We all know that there are multiple benefits tied to having greater equity in the home you’re buying, that doesn’t mean you’re out of the league of becoming a property owner. Here are some options for lower down payments.
3.5% DOWN PAYMENT
For an FHA loan, the least amount of down payment you would require to buy a home is 3.5%. Most lenders can provide up to $417,000 exempting Alaska, Hawaii and Guam. Typically, FHA loan has a monthly mortgage insurance payment, which can make it more costly than a conventional mortgage.
5% DOWN PAYMENT
This is yet another popular option for buyers. They can seek a conventional loan with 5% down payment. Its loan size amounts up to $417,000 (with the exception of Alaska, Hawaii and Guam) with as small as a 5% down payment. A substitute to the higher-priced FHA loan, the conventional loan enables buyers to get rid of the PMI once they accumulate 20% equity after a period of 24 months.
0% DOWN PAYMENT
There are typically two options with the 0% down payment; one is through the U.S. Department of Veterans Affairs. According to this program, a veteran can purchase a house by literally paying no money as down payment; which also means that the purchase price and loan amount are equal.
There are two stipulations attached to this program: one, this program is only for military veterans; two, the home (intended to be bought) must surpass a pest inspection. This alternative could be most favorable for brand-new construction or for property where any pest destruction can be repaired in time for closing.
The second option is a loan assured by the U.S. Department of Agriculture, USDA. While you are not required to be a veteran to qualify for this loan, in some areas, you may not be entitled to benefit from the program on account of rigid qualifying income-to-payment ratios and locality. Moreover, the program only works for homes that are designated rural by USDA.
Is buying a home in Fort Bend County taking a toll on you? Rest assured we will provide you with the finest Fort Bend County Homes through our property listings. Contact us for more details.