One of the first barriers to home ownership is the down payment. There are programs to help assist first-time home buyers or previous home-owners entering the market to purchase a home without a large down payment. In addition to lower down payments, the lender typically requires a mortgage insurance to be purchased alongside the loan if the loan amount is greater than 80% of the home’s value. Sometimes this mortgage insurance can be included in the rate of the loan.
Zero Down: VA and USDA both offer programs that allow the borrower to purchase a home without any down payment. There are restrictions that apply. To be eligible for a VA loan you must be a veteran of the US armed forces and obtain a Certificate of Eligibility. More information can be found here at the VA website. USDA loans have restrictions on income of the borrower and are available only to homes in rural areas. USDA has a property eligibility tool for you to verify if the home you are looking at is in their pre-defined rural areas.
Down Payment Assistance: Some programs offer grants to the borrower to allow them to purchase a home without a down payment, but the amount granted will need to be paid back upon sale of the home.
1% Down with Equity Boost: Fewer restrictions, and a great option for many people. This program is really a 3% down payment program that has the lender contributing assistance to the down payment that never has to be paid back. You put down 1%. Your lender contributes 2% for the down payment; giving you 3% equity in your home. Then you finance the rest with the option to avoid monthly mortgage insurance and still get a great rate. It is an exciting new option for just about anyone looking to buy a new home. More Information.
Call the professionals at Best Way Lending to help you find what program is best for you.