How To Buy a House With Little Money Down

For many potential homebuyers, saving up for the down payment is the biggest hurdle to overcome, but did you know it is possible to buy a house with little down money? There are mortgages designed specifically for people who can’t pay the standard 20% down payment.

This article will explore your options for buying a house with little or even no down payment.

Mortgages That Require Little Down Money

Traditionally, standard mortgages used to require a down payment of at least 20% of the property’s purchase price, but nowadays, new data from the National Association of Realtors shows that the median down payment is 14%.

However, compared to the skyrocketing home prices, 14% is still not a realistic amount for many. Instead, homebuyers can apply for mortgages like FHA, USDA, and VA loans instead.

• FHA Loans. An FHA loan is one of the best loan options for homebuyers with little down money. This loan is backed by a government agency and is the country’s largest residential mortgage insurer. They are especially popular with first-time homebuyers because they offer down payments of as little as 3.5%. To be eligible for this type of loan, your debt-to-income ratio (DTI) will be considered, although they are pretty lenient with this ratio, and you’ll need a credit score of at least 500. You should note that this type of loan may have higher interest rates and insurance premiums.
• USDA Loans. Unlike FHA loans, USDA loans backed by the U.S. Department of Agriculture offer a zero-down payment mortgage for homebuyers in eligible towns and rural areas with a population of no more than 35,000. To qualify, your credit score and debt-to-income ratio (41% or lower) will be considered. If your credit score is low, other factors like employment history and income will be considered to ensure you can manage debt. While you will still be required to take out mortgage insurance, the cost is lower compared to conventional mortgage insurance. If you choose to pay the insurance premium upfront, it will likely be 2% of the loan amount.
• VA Loans. The Veterans Affairs loan is the third mortgage you may be eligible for that requires little to no down payments. In addition to very little or down payment, homebuyers don’t need to purchase mortgage insurance either. To qualify for this loan, you need to be an active-duty service member, veteran, or qualifying surviving spouse. You will also need a credit score. Some lenders require at least 580 and a debt-to-income ratio (DTI) of at least 41%

Contact The FHA Mortgage Experts in Fort Lauderdale

Are you ready to purchase your dream home with a FHA loan? Contact the friendly team at Florida State Mortgage Group to get the process started. Call us at (954) 359-3000 to schedule a free consultation.