Tuesday, August 23, 2016
The 20% Down Payment Myth
Many would be homebuyers have heard or read that it's best or even required to put a 20% down payment on a home in order to obtain financing. A down payment is just the amount of cash you are putting toward the purchase of the home. For a $200,000 home, 20% would be $40,000. For most, an improbable amount of cash.
After the housing crisis, access to credit tightened, especially for median income homebuyers, including credit worthy buyers with the income to buy but not the large down payment. Thankfully that has changed and newer low down payments options are available to those who qualify for a fully documented mortgage.
A recent study found that it would take most buyers on average 12.5 years to save enough for a 20% down payment on a home. That's more than 12 years of rent and watching home values continue to rise. However, there are now several options for buyers to take advantage of low down payment financing.
- FHA loans are a popular option for first time home buyer.
- Freddie Mac's low down payment loan HomePossible mortgage allows down payments of as little as 3-5% with flexible sources of funds for the down payment.
- Fannie Mae's new HomeReady mortgage allows a 3% minimum down payment and allows everyone residing in the home's income to be considered even if they are not a borrower on the mortgage.
Additionally all borrowers do not have to reside in the property, allowing co-borrowers such as parents who won't be living in the home to help the kids qualify.
Contact me directly 561-306-6736 firstname.lastname@example.org for more help and information on available homes and low down payment options.