If you think that you need to come up with a huge down payment to purchase a new home, rest assured that you are in good company. Thankfully, this assumption is not rooted in fact for many homebuyers. The reality is that you may be able to purchase your next home with little to no money down. There are several loan programs and down payment assistance programs that you could qualify for.
Traditionally, homebuyers make a 20-percent down payment, but you could get into a home with no money down through a government-backed loan program. These programs provide the lender with a guaranty that the lender will not experience financial loss if you default on the loan. As a result, the programs decrease the amount of risk that the lender is exposed to when making your loan. The two primary types of zero-down, government-backed mortgages are USDA and VA loans. USDA loans are specifically for properties that are in suburban or rural locations. VA loans are for qualifying military professionals or their spouses. There are also credit score and income requirements for both of these programs.
If you do not qualify for these zero-down options, rest assured that you may still qualify for an option with a low down payment. With a conventional loan program, you usually can make a down payment of less than 20 percent if you add a private mortgage insurance payment to your monthly loan payment. FHA loans are also available if you meet specific requirements. They enable you to pay as little as 3.5-percent down. Home Possible is another loan program offered through Freddie Mac, and it has a 3-percent down payment requirement with reduced mortgage insurance required. On top of these programs, there are various down payment assistance programs and grants that may help you to get into a home sooner and with less money down.
Are you curious about the financing possibilities available based on your qualifications? Our lending pros at MortgageDepot are happy to help you get familiar with your options. Contact us today to learn more.
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