Contrary to what you might have thought, there are several down payment options for home loans that borrowers can consider! Depending on your scenario, saving 20% for a down payment might not be necessary.
The down payment is the initial payment made by the homebuyer at the time of purchasing a property, and it is typically expressed as a percentage of the total home price. Here are some common down payment options:
FHA Loan
- An FHA loan allows borrowers to make a down payment as low as 3.5% of the purchase price. These loans are popular among first-time homebuyers and those with lower credit scores. Many borrowers qualify for the 3.5% down, even if you are not a first-time home buyer!
Conventional Loan
- A conventional loan typically requires a down payment ranging from 3% to 20% of the home’s purchase price. The exact amount depends on the lender’s requirements and the borrower’s creditworthiness.
VA Loan
- A VA (Veterans Affairs) loan is available to eligible military service members, veterans, and their spouses. VA loans often require no down payment, making them attractive options for those who qualify.
Gift Funds
- Some lenders allow borrowers to use gift funds from family members or close relatives to cover all or part of their down payment.
Down Payment Assistance Programs (DPAs)
- DPAs are programs offered by various organizations and agencies that provide financial assistance to eligible homebuyers to cover part or all of their down payment and closing costs.
It’s important for homebuyers to understand the specific down payment options available to them. Additionally, down payment requirements and options may change over time, so it’s essential to discuss with a mortgage professional who is aware when these changes happen.
Consult with a mortgage lender or financial advisor to determine the best approach based on your financial situation and goals! Fill out our inquiry link HERE and one of our loan officers will reach out to you to discuss your specific scenario.