Think a home buyer needs a large down payment? Many people do. Here we debunk three common myths and give home buyers alternatives to these widely held beliefs.
· Myth #1: Homebuyers must have a 20% down payment.
There are several no money down and low down payment mortgage programs available to home buyers. Veterans Administration (VA) loans and USDA Rural Housing allow home buyers to finance the entire purchase price of a home and put 0% down. FHA loans allow for as little as a 3.5% down payment and Fannie Mae and Freddie Mac mortgages allow for 5% down payment.
· Myth #2: There are no more down payment assistance programs.
While the guidelines for home buyers to receive grants or other down payment assistance programs have changed slightly, they still exist. For example, the Federal Home Loan Banks’ Affordable Housing Program provides up to $5,000 to eligible homebuyers for down payment and closing cost assistance and is available through participating banks.
· Myth #3: Homebuyers must make a 20% down payment or they must pay monthly mortgage insurance.
While a 20% down payment is a basic requirement to eliminate monthly mortgage insurance, homebuyers have several other options to eliminate monthly mortgage insurance while having less than a 20% down payment. With a 10% down payment home buyer can combine a first and second mortgage and with as little as a 5% down payment homebuyers can use lender paid mortgage insurance to eliminate the need to pay monthly; all while lowering their monthly payment.
If you’re searching for a home to purchase throughout Northern Virginia, search online at www.virginiaproperties4sale.com
If you have questions regarding down payments or other mortgage financing questions, call 1st Mariner Bank at 877-733-4411.