In this age of high inflation, who doesn’t want to save a buck? Of course, everyone does. So, if you’re looking to buy a home any time soon, you might be worried about how much of a down payment is required. After all, there’s still a widely held misconception that all or most home purchases require a down payment of 20%. The reality, however, is that nothing could be further from, well, reality. The truth of the matter is that of the four major types of mortgage loans, none require 20% down or anywhere close to it. So for those wondering how to buy a home without using all your cash, wonder no more. Up next, we’ll show you how each of these four loan programs won’t cause you to break the bank on a down payment.
Otherwise known as a Rural Housing Loan, this type of loan is made possible by the U.S. Department of Agriculture. USDA borrowers can buy a home with a down payment as low as zero percent. Yes, you read that correctly. However, you must have a credit score of 620 or higher and buy in an eligible rural or suburban area. And you must be within certain income limits. You can learn more about USDA loans here.
While some types of conventional loans require a rather substantial down payment, not all of them do. In fact, there are three types of conventional loans that require a down payment of just 3%. They are the Conventional 97 loan, the HomeReady loan and the Home Possible loan. While income limits apply on the latter two options, there is no income limit on the first option. To read more about the Conventional 97 loan and why it might be a great choice for you, click here.
Veterans, active duty military personnel, military wives, honorably discharged service members and those who’ve served in the Reserves or National Guard may be eligible for a VA loan — which does not require a down payment of any amount. VA loans, made possible by the U.S. Department of Veterans Affairs, carry some other great advantages as well. To learn all about them, visit the Department of Veterans Affairs’ website or click here.
FHA loans — which are insured by the Federal Housing Administration — do require a down payment. That’s the bad news. The good news is it’s not a hefty one. At just 3.5% in all U.S. markets, the money you must put down on an FHA loan is manageable for most homebuyers. Another big perk is that you can typically secure this type of loan with a fairly low credit score. For more on FHA loans, go here.
If you’ve been concerned about how to buy a home without using all your cash, don’t be. It’s very possible to make a home purchase without a down payment eating up all or most of your savings. Want to know more? Contact us today at Fairway of the Carolinas. We look forward to answering any questions you have and helping you find the right loan for the home of your dreams. Let’s chat soon!