It surprises me when I talk with clients and sometimes agents who still think you have to put down 20% to get a mortgage/buy a home. I hear this statement all of the time. To this day, I will turn on the TV and see a talking head (who should know better) discussing mortgages and the 20% down being an obstacle to home buying.
20% down could not be further from the truth! I don’t understand how the media and banks have not been able to get across that there are a LOT of minimal or no down payment options.
If I help 10 people buy a home, probably about 4 in 10 put down 20% as a down payment. Probably 2 in 10 or 3 in 10 (20-30%) go with ZERO down options or 3% down options. There are a LOT of programs out there to help if you don’t have money saved to make a large down payment on your next home. VA (loans for veterans), VHDA (State of Virginia Bo
nd Loan), and USDA (rural homes) all have 100% down options. FHA which is a VERY common loans only requires 3.5% down and is very credit lenient. Even the traditional “Conventional” loan only requires 5% down. It is true that there are more guidelines and tougher underwriting requirements with a smaller down payment. It is NOT true however that you have to have perfect or even good credit to get 100% financing loan.
When you put down less than 20% you do need to have mortgage insurance on the loan. This limits the risk for the mortgage holder in case of default. Mortgage insurance is surprisingly inexpensive and can be worked into the rate on the loan or paid up front rather than in the monthly payment.
Don’t let the misperception that you must have a down payment of 20% keep you from exploring moving or buying a home in 2014! As always, all consultations are free and easy so please call with questions, to get preapproved, or to see estimates.
Greg Cowart – Mortgage Consultant
Movement Mortgage – firstname.lastname@example.org
804.306.6463 – NMLS # 204399