Contrary to popular belief, you don’t need a huge down payment for a home.
Good news for potential home buyers: You really don’t need much money to purchase a home.
Most loan programs require little or no down payment. The seller can pay some or all of the closing costs. Plus, the inspection fees may be able to be billed at closing.
VA home loans and USDA 100% Guaranteed Rural Housing Loans require no down payment. FHA requires 3.5% of the purchase price but those funds can be gifted. Also, 5% is the minimum down payment on conventional loans and those funds can be gifted as well.
The sellers of the home can provide closing cost help for the borrower. USDA and FHA allow 6% of the purchase price. VA is unlimited and conventional is limited to 3% in most cases. The lender can also provide some lender credit toward closing costs.
Home buyers do need to have some up front funds. These would be used for the initial earnest money deposit to be given with the offer on the home. The appraisal fee will need to be paid prior to the appraisal being ordered. VA appraisals are billed at closing.
If you have been thinking you can’t buy a home because you don’t have a hefty down payment, the wait is over. It is definitely possible to purchase a home without much money in the bank.
Check with a qualified licensed mortgage professional to find out how you can get started on your home buying adventure.
By JoAnn Moore, Licensed Mortgage Professional, NMLS #165477, President and Owner of The Mortgage Market of Delaware, LLC in Georgetown, Delaware. Office 302.855.1306, Cell 302.236.1229, MMODJoAnn@aol.com.