If you don’t have 20% for a down-payment, don’t worry! You may still qualify for a variety of different mortgages depending on your other circumstances. Back in the day, to obtain a mortgage to buy a house you had to have a minimum of 20% to use as a down payment. Although some borrowers do still come to closing with 20% down payment, many borrowers also opt instead to use different down payments.
Some popular loan programs offer zero down, 3.5% down, 5% down and 10% down payment options. Depending on the loan program and down payment size you choose, you may encounter either a one time mortgage insurance payment or a monthly mortgage insurance payment that is added into your monthly house payment. This insurance called PMI protects the lender against default, and is usually standard for borrowers who elect to put less than 20% of the home’s value down.
In short, you do not have to have 20 % down payment to purchase a home.
Here are some great mortgage programs that you can apply for that do not require a twenty percent down payment.
1. FHA Loans— FHA Loans are government loans that only require a 3.5% down payment.
2. RD Loans– The USDA RD loan is a government loan that allows people to purchase homes in non-urban areas with zero down payment.
3. VA Loans– If you are a Veteran, the VA loan has no required down payment and also offers very competitive interest rates.
4. Conventional Loans— There are many different down payment options with this loan type, but 3%, 5%, and 10% down are all typical options with conventional loans.
These are four great options for buying a house if you have less than 20% down. Of course interest rates, mortgage insurance, and other terms will vary based on your situation and the loan type you choose. Call your lender for more details. Treadstone Funding is your local Grand Rapids Mortgage Company.