Down payment requirements are one of the biggest misconceptions in the market. Today we’re debunking the top 3 myths in time for spring homebuying.
Myth 1: I need a 20% down payment to get a mortgage.
This is perhaps the biggest myth in the market. Today borrowers can get a conforming, conventional mortgage with a down payment of as little as 5%. Most homebuyers are putting down between 5 and 10%. In fact, last year nearly a third of the 1.6 million loans that Freddie Mac funded were to buyers putting down less than 20%.
And some products, such as Freddie Mac’s Home Possible AdvantageSM mortgage, require a down payment as little as 3%. You have choices when it comes to your down payment so talk to your lender about what makes the most sense for you.
Myth 2: Down payments have to be all my own money.
Not necessarily, it depends on the program. For example, qualified borrowers can further reduce their 5% down payment coming out of their own pockets to 3% by lining up gifts from family or grants or loans from non-profits or public agencies.
Down payment assistance is the real deal. Thousands of dollars of home buying assistance are out there for qualified homebuyers like you. Every state, and many cities and counties, offers practical down payment assistance programs for qualified borrowers. A directory of these programs is available online through the U.S. Department of Housing and Urban Development (HUD) .
Myth 3: Low down payment options are only for first-time homebuyers.
While there are certain programs just for first-time homebuyers, low down payment options are available to most qualified homebuyers. Lenders will look at your credit history and other factors to determine if you qualify.
For example, you don’t need to be a first-time homebuyer to qualify for Freddie Mac’s 3% down Home Possible Advantage mortgage. Generally, to qualify you need to meet minimum credit requirements, earn no more than 100% of your area median income and have the funds to meet the down payment requirements and closing costs.
Follow this series just in time for the spring homebuying season.
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