If you’re dreaming of home ownership, and have the credit score and income to qualify for a mortgage but think that home ownership isn’t within your reach right now because you don’t have a significant cash down payment to put down; this article is for you! There are several mortgage products on the market today which feature no or low down payment requirements!
Fannie Mae’s Home Ready
Fannie Mae’s Home Ready program is available to prospective low to moderate income prospective homeowners (or those of any income who plan to buy in a Home Ready qualifying neighborhood or area) who have an established credit history and corresponding score of at least 620. One of the top advantages of the Home Ready program is that it requires just a 3% down payment, and the down payment may be funded by sources that traditionally won’t count as down payment sources, such as local government or organizational grants for home ownership.
FHA loans are an excellent option for many first-time homebuyers as they require just a 3.5% down payment. FHA loans also offer competitive terms like low interest rates and lower closing costs and fees than many conventional mortgage loans.
VA loans, which are available to active-duty service members, veterans or the spouse of a veteran (and some other individuals affiliated with our armed services) are one of the rare mortgage loan programs available that can require absolutely no down payment at all!
Conventional lenders with unique programs
Although most conventional lenders will require a 20% down payment to avoid mandatory private mortgage insurance (or, PMI) on the loan, some will waive PMI to credit-worthy borrowers who put down 10% or 15% as a down payment. Although 10% may still be quite a chunk of change, it certainly should be an easier amount to save for, as compared to trying to save the full 20% down.