Saving for a down payment is the first step in buying a home. Down payment amounts will always vary based on the individual’s credit history, income, cost of home, and type of mortgage chosen. Lenders had traditionally required 20% of the purchase price as the down payment, which can be difficult for many first time buyers. Putting 20% down is advantageous in that once it is paid, the buyer has already made substantial equity on the home, as well as qualifying for a better interest rate.
If 20% is too large of an amount, lenders are now accepting a lower amount – all the way to 0 down – for those borrowers who also take out private mortgage insurance or qualify for special programs. Down Payment info Some of these programs include:
Homepath, Home Possible and Homestyle
Jumbo with no mortgage insurance
Conventional Mortgage Insurance
In addition, the federal government offers special programs to lessen the down payment burden on buyers. For example, the Veterans Administration and the U.S. Department of Agriculture offer 0 down loan products. The Department of Housing & Urban Development offers 3.5% down, assistance for buying in distressed areas or to public safety employees.
Also, state and local cities and towns may often elect to offer special programs to assist homebuyers. The majority of these programs are for first time home buyers, usually in the form of tax incentives, grants or forgivable loans. Some local programs include:
The above is just a sampling – not a complete list of assistance programs. Speak with your loan officer about programs that may be available to you.