Home buyers may overestimate the down payment funds needed to qualify for a home loan. Also, the misconception exists that 20 percent is needed for a down payment, or you can’t qualify for a mortgage.
The truth is you can buy a house with a lot less than 20 percent down payment without feeling like you are getting a low-quality loan program. Which means more people can enter the housing market sooner with loan programs that allow less cash out of pocket.
If you are dealing with debt or low equity in house, it may feel like a struggle to save for a 20% down payment. Many mortgage programs offered by agencies like Freddie Mac and Fannie Mae allow buyers to put down as low as 3 percent to purchase their dream homes. If qualified, other program options include VA Loans that require no down payment and FHA Loans that only require a minimum of 3.5 percent down.
Low down payments are great for first-time homebuyers, as these programs have also allowed homeowners who want to capitalize on the equity they have in their homes to use the profit from their sale to pay off high-interest credit cards, fund education or even start a business.
Don’t let a misconception stop you from buying your dream home. Learn more by talking with a home loan advisor from GSF Mortgage Corporation.