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Easing Your Way Into Homeownership: A Guide To Low Down Payment Mortgage Programs
There's no question about it: Buying a first home is a big financial commitment. In most cases, a home is the largest single purchase an individual or family will make in a lifetime. However, because of the tax advantages afforded to homeowners, buying a home also can be one of the best financial decisions you'll ever make. Problem is, many would-be homeowners remain renters simply because they mistakenly believe mortgage lenders require that buyers come up with 20 percent of the purchase price as a down payment. While it's true lenders feel it's less risky to work with buyers who are able to bring a substantial down payment to the table, the standard 20 percent requirement is fast becoming a relic of the past. In recent years, lenders have become more flexible in working with first-time homebuyers by creating a variety of special programs that require only a small down payment. These programs, combined with the most favorable interest rates in two decades, have encouraged growing numbers of renters to consider the tremendous benefits of home ownership. While the list of programs offered by individual lenders is too extensive to mention in detail, here are some common programs you are likely to come across as you work with your real estate agent to purchase your first home: Federal Housing Administration (FHA): FHS mortgages allow homebuyers to purchase a home with as little as a 5 percent down payment, and to finance all non-recurring closing costs. The current maximum loan amount in most urban markets is $151,725. In addition, borrowers are allowed to use up to 41 percent of their gross income toward paying mortgage debt - well above the ratio allowed under most private programs. Department of Veterans Affairs (VA): VA mortgages allow veteran or active service personnel purchase home with no down payment, up to the current maximum price of $184.000. However, there is no purchase price limitation for buyers able to make a down payment. Like the FHA program, VA borrowers can put up to 41 percent of gross income toward their mortgage debt. Mortgage Revenue Bonds and Mortgage Credit Certificates: Mortgages funded with these instruments typically require a minimum of 5 percent down and have interest rates that are 1.5 to 2 percentage points below conventional 30-year fixed rates. These types of loans, offered by state and local housing agencies, are available only to first-time homebuyers. There generally are income and purchase price caps that vary, depending on where you plan to buy. Private Mortgage Insurance: Most major lenders offer privately insured mortgages, which generally require a 10 percent down payment (although some lenders offer loans with a 5 percent down payment to buyers with exceptional credit). These loans typically are not limited by maximum loan amount or purchase price limitation. Community Homebuyer Program: Through their networks of mortgage lenders, the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) offer Community Homebuyer Program loans. These programs require a 5 percent down payment, 3 percent of which may be a gift. To further help buyers qualify, applicants may use 38 percent of their gross income. Currently, the maximum loan amount available through these programs is $203,150. Clearly, there are a lot of options for first-time homebuyers. While lenders will be more than happy to share information about their own programs, you can save yourself a good deal of time by first selecting a professional real estate agent who is experienced in working with first-time buyers in the areas where you plan to buy. An agent who focuses on first-time buyers will know from experience which lenders in your area offer a low down payment program that will meet your unique needs. Today, taking the first step toward owning your own home is easier than before. Your real estate agent is your best resource for finding innovative ways to help you come up with a down payment and qualify for financing. There's certainly no need to wait until you've saved a 20 percent down payment! About The Author W. Troy Swezey is the author of "EASING YOUR WAY INTO HOMEOWNERSHIP: A GUIDE TO LOW DOWN PAYMENT MORTGAGE PROGRAMS." As a Realtor at Century 21 Paul & Associates, he has helped many individuals with their real estate needs. Visit his web site to download his free e-book, "REAL ESTATE SECRETS EXPOSED." http://www.TroyIsMyRealtor.com or mail to: TroyC21@usa.net
MORE RESOURCES: L.A.’s Real Estate Upfronts Reveal Penthouse A at Rosewood Residences Beverly Hills Hollywood Reporter Erie County real estate transactions Buffalo News Worcester County real estate transfers, Sunday, May 19 Worcester Telegram Real estate mogul cautions about avoidable mistake when buying a home, explains how to avoid 'drowning' Fox Business Coloradans negotiating lower fees for real estate agents with new law on horizon Colorado Public Radio Massachusetts real estate transactions for Hampden, Hampshire and Franklin counties May 19, 2024 edition MassLive.com Portside Real Estate acquires Belgrade Lakes brokerage Kennebec Journal and Morning Sentinel Illinois real estate: Home sales in Peoria, Tazewell, Woodford counties Peoria Journal Star Slow April real estate market among Pueblo's top business news Pueblo Chieftain Hawaii Real Estate Sales: March 11-15, 2024 Honolulu Star-Advertiser Luxury Homes Are Booming in These 10 Unexpected Cities in 2024 Norada Real Estate Investments Real Estate Investment and Finance Hunton Andrews Kurth LLP REAL ESTATE | A look inside The Lofts at Cedar Lake on the campus of Cedar Community washingtoncountyinsider.com Wellesley resident Peter Covo joins Conn Kavanaugh as partner in firm's real estate practice The Swellesley Report Letter to editor: On recent misinformation regarding upcoming changes to the real estate industry Woodland Daily Democrat Revised Mortgage Rate Predictions Signal HIGHER Rates in 2024 Norada Real Estate Investments Top 10 Brooklyn Listings: A Flatlands Standalone Brownstoner Berks County real estate transactions for May 19 Reading Eagle REAL ESTATE | Check out Braund's Flooring & Remodeling LLC in West Bend, WI washingtoncountyinsider.com Increases in interest rates stress commercial real estate Richmond Times-Dispatch Private Advisor Group LLC Purchases 1425 Shares of Doubleline Commercial Real Estate ETF (NYSEARCA:DCMB) Defense World STAR resource center Department of Taxation and Finance Egypt boasts real estate portfolio valued at $200bn, ready for international export - Dailynewsegypt Daily News Egypt Amalgamated Bank Trims Stock Position in Apollo Commercial Real Estate Finance, Inc. (NYSE:ARI) Defense World Celebrity Real Estate Realtor.com News Kenosha CubeSmart storage facility sold to new owner Kenosha News The Properties High Interest Rates Can't Touch The Wall Street Journal Connecticut real estate law changed after MV Realty investigation Eyewitness News 3 $6 million home was Houston's top residential real estate sale of its week (PHOTOS) Houston Business Journal Real estate transfers: May 17, 2024 RiverheadLOCAL Apollo Commercial Real Estate Finance, Inc. (NYSE:ARI) Stock Position Reduced by Victory Capital Management Inc. Defense World News anchor sells luxury Scottsdale home he built for $6M The Business Journals Robert Willett may be targeting female Realtors in Northeast Ohio Akron Beacon Journal 10 most expensive homes sold in Cuyahoga Falls, May 6-12 cleveland.com China Says It Will Start Buying Apartments as Housing Slump Worsens The New York Times China's real estate market sees surge in weekend consultations and trading, boosted by accommodative policy Global Times Real Estate Mogul Grant Cardone Closes Largest All-Cash Multifamily Deal In South Florida This Year Yahoo Finance Mid-May Greenwich Real Estate Market Report Greenwich Sentinel Refined Real Estate: Unique Leschi home with lake views lists for $1,395,000 seattlerefined.com London Real Estate Is About to Get the ‘Selling Sunset’ Treatment Hollywood Reporter What's real estate wellness? Fortune 10 most expensive homes sold in Portage County, May 6-12 cleveland.com Real Estate Newsletter Articles this Week: Housing Starts Increased to 1.360 million Annual Rate in April Calculated Risk Billionaire Frank McCourt raises his hand to buy TikTok Business Insider Should I Buy a House Now or Wait Until 2025: Expert Forecast Norada Real Estate Investments Dodge County Real Estate Transfers Fremont Tribune Why Renting Still Makes More Sense Than Buying in Major US Cities Business Insider Ellison sues real estate broker Chad Banken over alleged schemes involving contracts for deed Star Tribune Busch relative settles squabble with Clayton investors over real estate trust St. Louis Post-Dispatch Home listings are on the rise in southern Colorado, while other indicators show a slowing real estate market Colorado Public Radio Southern fast-food chain Cook Out buys Tampa real estate Tampa Bay Business Journal |
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