Working as a Brooklyn mortgage lender, I have many new clients looking to buy their first home. A lot of people struggle to come up with the 20% down payment. However, there are ways to buy a home with a minimum or no down payment. There are some down payment mortgage programs that you may qualify for.
USDA Home Loans
A housing program was created by the U.S. Department of Agriculture known as the rural development loan. It’s geared towards low and moderate-income families and requires no down payment. These loans also have a much lower mortgage insurance premium, which is only .035% in comparison to the 0.85% you need for FHA mortgage loans. Your yearly mortgage insurance payment is calculated into your monthly payments.
Not many people think to go for this type of loan because they are under the assumption that rural means farmland or undeveloped areas. This isn’t entirely true though. Many areas that are just outside of major cities are also considered to be rural.
VA Loans
If you are a Veteran you may be able to qualify for a VA mortgage loan. This type of loan gives 100% financing, so you don’t need to come up with that hefty downpayment. These mortgage loans also do not require you to have mortgage insurance, which can save you thousands. VA mortgage loans are the cheapest that you can get in this day and age.
There is a VA funding fee that comes with this loan, however. You are charged a one-off fee of about 2.15% of your loan amount. The fee is used to help this program remain self-sufficient. The funding fee can be calculated into your loan. To qualify for this type of loan, most lenders will require you to have a credit rating of 620. However, there less restrictive options for those with lower credit scores, and every lender is different. This is why it’s important to speak to one of our Brooklyn mortgage lenders, to see what options are open to you.
FHA Loans
The Federal Housing Administration, or FHA, was created back in 1934. The purpose was to encourage people into homeownership with a reduction in the usual requirements for qualifying for a mortgage. FHA mortgage loans will allow you to make a low downpayment and have requirements that are more flexible than traditional loans. It’s a good option for first time home buyers.
An FHA loan is insured by the FHA. This means that should the borrower default on their payments, the FHA will pay the lender the money they are owed. If you have a credit score that is at least 500 you can qualify for a loan with a down payment as little as 10%. Scores of 580 or higher will get you a 3.5% down payment requirement. FHA loans also offer a variety of terms, such as 15 and 30-year fixed rate mortgages
It is possible to buy a home with a minimum or zero down payment depending on your circumstances. If you are looking to buy a home but are struggling to get that down payment, give our Brooklyn mortgage lenders a call today.
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