{"id":2154,"date":"2015-08-29T14:17:41","date_gmt":"2015-08-29T14:17:41","guid":{"rendered":"http:\/\/teammovemortgage.com\/?p=2154"},"modified":"2020-07-13T22:34:21","modified_gmt":"2020-07-13T22:34:21","slug":"low-down-payment-options-2","status":"publish","type":"post","link":"https:\/\/teammovemortgage.com\/blog\/low-down-payment-options-2\/","title":{"rendered":"Homebuyer Series: “I Want to Buy a Home-In a Year or Less” No to Low Down Payment Financing Options"},"content":{"rendered":"

Low down payment options for today’s buyers is a popular concern among other areas.\u00a0 In this series, we are providing tips to avoid the Most Common Roadblocks to Home Ownership.\u00a0 So far in previous weeks, we have discussed how to solve<\/p>\n

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  1. Limited or bad credit<\/li>\n
  2. No down payment<\/li>\n
  3. Not having a budget<\/li>\n
  4. Documenting rent history<\/li>\n
  5. Not understanding a\u00a0Buyer’s Agent\u00a0role<\/li>\n<\/ol>\n

    Today, we are discussing Roadblock # 6:\u00a0 Understanding the no to low down payment options.\u00a0 <\/strong><\/p>\n

    Many say, “I have heard of FHA, but that is about it for mortgage loan knowledge”.\u00a0 A lot of buyers\u00a0misunderstand mortgage requirements.\u00a0\u00a0Often buyers believe the options require perfect credit, 20% down, or\u00a0an FHA loan.\u00a0 But there are SO many other great mortgage loan options for today’s homebuyers.<\/p>\n

    \"Homebuyer
    Homebuyer Series: Understanding Mortgage Home Loan Options for First Time Buyers<\/figcaption><\/figure>\n

    Low Down Payment Options Available for Buyers<\/h2>\n
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    1. VA home loans are for active duty, Veterans, or qualifying surviving spouse of a veteran<\/strong>.\u00a0 This is a no money down financing option\u00a0plus the seller can pay all closing costs and\u00a0even pay off a buyer’s debt to help qualify.\u00a0\u00a0Learn more about VA loan tips here<\/a><\/strong><\/span><\/li>\n
    2. USDA Rural Development for low to moderate income families is a great no money down mortgage option<\/strong>.\u00a0 There are a lot of misconceptions about USDA loans.\u00a0 A\u00a0common one is that\u00a0buyers must have very low income, yet\u00a0households can make\u00a0near $100,000 or more per year.\u00a0 The amount of income qualifications depends on the family size and the county.\u00a0 Secondly, many believe the\u00a0loan is for purchasing low priced homes only.\u00a0 Actually, USDA will allow up to a price of $424,100!\u00a0 Third\u00a0misunderstanding is that USDA loans are for buying farms, yet USDA guaranteed loans actually don’t allow income producing farming type properties.\u00a0\u00a0Lastly, a lot of buyers believe that they are hard to qualify for, but borrowers may have a 620 credit score.\u00a0\u00a0Sellers\u00a0may pay up to 6% of the sales price in closing\u00a0costs for the buyer.\u00a0 This feature\u00a0often allows\u00a0a USDA buyer to bring no money at all to closing or even get back their earnest money.\u00a0 Learn more about USDA loan tips & details here<\/a><\/strong><\/span><\/li>\n
    3. NC & SC Housing Finance Agency Home Advantage Program, with or without\u00a0Down Payment Assistance, can combine with other loan types to create\u00a0no to low down payment options<\/strong>.\u00a0\u00a0 These loans have a minimum credit score requirement of 640 plus there is a maximum income limit for any borrowers on the loan of $87,500.\u00a0\u00a0Notice that this says “borrower” income rather than “household” like USDA.\u00a0\u00a0This feature may help buyers that exceed the household income limits.\u00a0 Additionally,\u00a0there is no geographic restrictions like USDA other than the property must be in North Carolina or South Carolina.\u00a0 The Down Payment Assistance is a 0%, no payment required, forgivable loan.\u00a0 The down payment assistance\u00a0may be used towards down payment, closing costs, or both.\u00a0 This type of loan is especially popular for buyers looking for no to low down payment options in larger NC and SC\u00a0cities that are not USDA approved.\u00a0 Learn more about Down Payment Assistance here<\/a><\/span><\/strong><\/li>\n
    4. FHA allows for a down payment as low as 3.5% of the sales price, allows for 6% of the price in seller paid costs for the buyer, and the down payment can be a gift from an allowable source like family.<\/strong>\u00a0 FHA is more forgiving on credit scores and medical collections so for this reason, it is a very popular type of mortgage loan.\u00a0 There are no income or geographic limitations, but there are loan size limits depending on the county of the property.\u00a0 Check your county FHA loan size limits on these links. Learn more about FHA details and loan tips here<\/a><\/u><\/strong><\/li>\n
    5. Construction to Perm VA & FHA one-time closing loans allow a buyer to build a new home with\u00a0low out of pocket money.\u00a0\u00a0<\/strong>\u00a0A benefit of a construction loan is that\u00a0there is only one qualification\u00a0which is\u00a0prior to closing.\u00a0 This means that\u00a0a credit re-pull, asset verification, or employment verification is not needed once the loan\u00a0closes.\u00a0\u00a0Our construction perm loan has a minimum credit score requirement of 660.\u00a0 Many are frightened by the closing costs on a construction loan as they are higher than traditional loans.\u00a0 Actually when a builder funds the construction, these costs are built into the price.\u00a0 So with a construction loan, the builder is able to offer a lower price as the costs will be in the construction loan.\u00a0 So whether you already own land or want to buy land, this is a great way to build your dream home.\u00a0\u00a0Learn more about Construction Perm loans here<\/strong><\/li>\n
    6. FHA 203k Purchase Rehab loans allow buyers to purchase\u00a0a home that requires some TLC.\u00a0 <\/strong>The home is\u00a0in the right neighborhood,\u00a0school district, and has the overall layout desired.\u00a0 BUT, the home needs work!\u00a0 Well, a rehab loan\u00a0allows buyers to complete an HGTV remodel and a purchase at once.\u00a0\u00a0Typical remodels include renovations of bathrooms, kitchens, HVAC, and many more options.\u00a0 Learn more about FHA 203k purchase rehab loans here<\/a><\/u><\/strong><\/li>\n
    7. Conventional Fannie Mae or Freddie Mac loans\u00a0are even great low down payment options for first time buyers<\/strong>.\u00a0 Conventional loans offer down payments as low as 3%.\u00a0\u00a0 Buyers with higher credit scores\u00a0find\u00a0several PMI benefits for conventional compared to\u00a0FHA.\u00a0 Plus conventional loan PMI may cancel after a few years.\u00a0 FHA PMI often continues for the life of the loan.\u00a0 These products even allow for gift funds to be used for down payment.\u00a0\u00a0Finally, the seller may also pay the buyers closing costs.\u00a0\u00a0Seller paid limits for conventional loans are explained below.\n
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      1. Less than 10% down = 3% of the price<\/li>\n
      2. 10% – 24.99% down = 6% of the price<\/li>\n
      3. 25% or more down = 9% of the price<\/li>\n<\/ol>\n<\/li>\n<\/ol>\n

        We encourage you to talk to our mortgage experts early to discuss which mortgage product matches your goals the best.\u00a0 We hope that you learned valuable\u00a0low down payment options\u00a0that will save you money.\u00a0 Plus\u00a0these tips can help you\u00a0purchase the home of your dreams.\u00a0 Following these tips and steps up-front will make\u00a0a purchase go much easier.<\/p>\n

        Read the other articles in the Homebuyer Series – “I want to buy a home in a year or less!”:<\/h2>\n