NAVIGATING DOWN PAYMENT OPTIONS ON A HOME

Whether purchasing a first-time home, or looking to move to a new property, one of the biggest concerns buyers have is the amount needed for a down payment. There is a common misperception that every purchase requires a 20% down payment to qualify for a mortgage on a new home. While there are some positives to placing 20% down, there are many options for putting less down, and even some potential advantages.

Conventional Loans: Traditional loans underwritten to Fannie Mae and Freddie Mac Guidelines allow for as little as 5% down for anyone purchasing a primary residence. There are also options (with income limits) for as little as 3% down. These loans will have Mortgage Insurance (MI) that can either be paid up front or monthly. MI will go away after a period of time.

FHA (Federal Housing Administration): Allows for 3.5% down. This is a good option for buyers with poorer credit. FHA has monthly MI and an up-front MI premium that can be financed into the mortgage.

USDA (for rural properties) and VA (veteran and spouse approved): These allow for up to 100% financing. VA is available for eligible Veterans and USDA is available for everyone within certain income limits.

For a buyer who has a finite amount of cash available for a down payment, putting 15% down and paying an upfront MI on a conventional loan can be a great way to keep some money for furnishings or upgrades.

Bottom line, there are many options for a buyer with less than a 20% down payment. For more information or specific scenarios please contact Josh Kagan at Group Mortgage. Call 970-879-0996 or visit www.houseloan.com.