With rental vacancies at historic lows, and rental rates stronger than ever, many renters are considering becoming first-time homebuyers. However, some potential new homeowners may be held back by what they think they know, even if their preconceived ideas are incorrect.
GoBankingRates.com posted 7 Common Myths About Home Buying this week, and the number one misconception among homebuyers is that you must have a big down payment. Many in the market for their first home assume you must put down at least 20% of the purchase price. While 20% is known as a sort of magic number when it comes to down payments on a house because it eliminates the need for private mortgage insurance, there are many options for first-time homebuyers with much lower down payments.
First, FHA insured loans only require a 3.5% down payment, and under the Conventional 97 program, only a 3% down payment is required. In both cases, the down payments may be made up entirely of gifted funds.
For those who qualify, there are even some no down payment-required mortgage loan options. VA home loans are guaranteed by the Department of Veterans Affairs, and veterans and their spouses who meet the qualifications are eligible to apply. A USDA home mortgage is another option with no down payment required for those who qualify, and while it is sometimes called a “rural loan,” many homebuyers qualify, even if they don’t live in an area that is traditionally considered to be rural.
Even if you don’t qualify for one of these options, there could still be a low down payment option available to you. If you are considering buying a home, don’t be held back by what you don’t know. Talking to a mortgage lending professional, who can lay out all your options, is the best first step you can take.
Visit sites_lonestarfinan2.jumbowp.com today to read about mortgage options, or to contact a mortgage lending expert.
Additional source: TheMortgageReports.com, “Today’s Common Mortgage Programs Which Don’t Require 20% Downpayment from Home Buyers”