The media is filled with news about the mortgage melt-down and tightening lending standards that require large down payments so it should come as no surprise that many Tampa real estate buyers are under the impression it is impossible to buy without a large down payment.
While it is true that banks and other lenders have increased down payment requirements in recent months, it is still possible to buy a Tampa condo or home with a low down payment.
Low Down Defined
The first step is to actually define a low down payment. Historically banks required 20 percent or more down on the price of a home. A low down payment is typically defined at 3 to 5 percent of the mortgage and is still available especially to first-time homeowners and low income buyers. Others may also qualify for special incentive programs, tax credits or other assistance designed to make buying a home more affordable.
Government Versus Private Insurance
Mortgages with less than a 20 percent down payment were insured by either private mortgage insurance (PMI) or government sponsored insurance such as the Federal Housing Administration (FHA), Department of Veterans Affairs (VA) or other government program.
Low Down Payment Programs
Below are some of the more common low down payment programs that may help you qualify for buying a Tampa home or condo with little money out of your pocket. Work with a reputable real estate agent that understands the requirements when dealing with each program to find an affordable home in your desired area.
FHA or Federal Housing Authority. By far one of the most popular low down payment options is the FHA program. FHA homes require as little as 3 percent down and are an excellent choice for new home buyers or those on limited incomes.
VA or Veterans Administration. Traditional VA homes are limited to qualified veterans and reservists however, VA foreclosures are available to all buyers including investors. The two programs are distinct and should not be confused. Both require minimal down payment although the VA foreclosure program requires a 2.5 percent vendee fee.
USDA-RHS. The U.S. Department of Agriculture Rural Housing Service is an excellent program for new home buyers, those with limited incomes and others seeking to purchase a single family home or farm on the outskirts of the Tampa area.