Conventional wisdom says you need a 20% down payment to buy a house, but for first-time homebuyers, this can be daunting. Fortunately, various programs can help you afford a mortgage with lower down payments. Here’s a look at some of these programs:
1. Low-Down Payment Conventional Loans:
– Conventional 97 Mortgage: Requires just 3% down and a minimum credit score of 620, with private mortgage insurance (PMI) until you reach 20% equity.
– HomeReady Mortgage: Similar to Conventional 97, requires 3% down with potentially lower PMI costs.
– Home Possible Mortgage: Freddie Mac’s version, also with a 3% down payment.
– HomeOne Mortgage: Exclusive to first-time homebuyers, with a 3% down payment and PMI.
2. Down Payment Assistance (DPA) Programs:
– Low-Interest Loans:  Second mortgages with low interest to cover down payments.
– Deferred-Payment Loans: No-interest loans payable when the home is sold or refinanced.
– Forgivable Loans: No repayment required if you meet certain conditions, like living in the home for a set period.
– Down Payment Grants: Free money for down payments, typically for low- or moderate-income buyers.
3. Federal First-Time Homebuyer Programs:
– FHA Loan: Requires 3.5% down with a minimum credit score of 580. Mortgage insurance is required for the life of the loan unless refinanced.
– VA Loan: Offers 100% financing for eligible military members, with no down payment or private mortgage insurance required.
– USDA Loan: Provides 100% financing for homes in designated rural areas, with income limits.
4. State, Non-Profit, and Employer-Sponsored Programs:
– Local Programs: Many states and counties offer down payment assistance programs. For example, Colorado offers a 3% down loan with no mortgage insurance requirement.
– Non-Profit Programs: Organizations like the National Homebuyers Fund and Habitat for Humanity provide down payment assistance and affordable housing options.
– Employer-Sponsored Programs: Some employers offer housing assistance, often in the form of forgivable loans.
5. Special Programs for Students and Certain Professions:
– Good Neighbor Next Door: Offers 50% off homes for teachers, law enforcement, firefighters, and EMTs in revitalization areas.
– HomePath Ready Buyer Program: Provides up to 3% closing cost assistance for purchasing foreclosed homes.
*This is just a guide.See your loan officer for details