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Posted on Dec 11, 2016 in Finance |

How To Buy A House With Low Or No Money Down

How To Buy A House With Low Or No Money Down

Being a first-time home buyer is a very exciting time.  Finally having a place to call your own is a good feeling.  Applying for your first mortgage can be a stressful and time-consuming venture.  The fees, paperwork and legal terminology are enough to intimidate most of us. Taking your time to find the right program can save you money and maybe get you into a home sooner than you thought.  If your credit score is a little low and you don’t have much in savings don’t be discouraged, these programs can help you.

 

FHA

This program is popular with first time home buyers.  The lender can be more lenient with their standards because The Federal Housing Administration guarantees a portion of the loan.

Here are some features of this program:

  • You only need 3.5% down, and it’s okay if you use money that you receive as a gift for the down payment.
  • You can include closing costs can in the loan.
  • A credit score as low as 580 is acceptable in most cases.
  • Interest rates can be lower than that of a conventional mortgage, but you also have to consider the cost of the premiums that you have to pay for the mortgage insurance in case you default on the loan and these payments are part of the loan for life.
  • There is also a fee of 1.75 % of the loan amount that is required upfront.
  • This program can be used to purchase multi-family properties up to four units which could cover all or part of your mortgage payments if you lived in one unit and rented out the others. Lending limits vary depending on the number of units you purchase and the state and county you choose. You can see a list of the limits at fha.com/lendinglimits.  You can find information on being a landlord at biggerpockets.com.
  • You will find a list of lenders near you at hud.gov.  

 

VA

The U.S. Department Of Veterans Affairs is a program for active military personnel, veterans, reservists, national guard and spouses of personnel who died during active duty.

Here are some of the features of this program:

  • You don’t need any money for the down payment.
  • Interest rates are usually lower than conventional loans.
  • A low credit score will not automatically disqualify you.
  • This loan does not require any mortgage insurance.
  • There are eligibility requirements, and you can find them at www.va.gov.
  • This program cannot be used to purchase a multifamily residence.

How to buy a house with low or no money down.USDA

The United States Department of Agricultural has a program that allows low and middle-income homebuyers to purchase a home in a rural area. You can find out what the income limits are in your county by going to https://www.rd.usda.gov.


Here are some of the features of this program:

  • You don’t have to put any money down, and a credit score as low as 640 is acceptable with most lenders.
  • Interest rates are comparable or lower than conventional mortgages.
  • There are monthly fees, called guarantee fees, with this program but they are typically less than mortgage insurance.
  • Visit the USDA’s website to apply.

 

Conventional

Thanks to Fannie Mae and Freddie Mac some conventional loan programs now allow lower down payments and competitive interest rates.

Here are some of the features of this program:

  • You only need 3% for the down payment.
  • A credit score as low as 620 is acceptable to most lenders.
  • Mortgage insurance will probably be required until you have 20% equity in your home.
  • You may need to have a savings balance equal to six months of mortgage payments.
  • Your debt to credit ratio will not be able to exceed 36% unless you have a higher credit score.

 

Banks

Some banks have their own programs to assist low to moderate income homebuyers. You should check with your local banks to see what options might be available.

BB&T has several options for people with a limited credit history or income.

Here are some of the features of their programs:

  • Low down payments that allow for certain costs to be gifted.
  • Allowing a person who will not be occupying the home with you to be a co-borrower.
  • Alternative credit histories accepted.
  • Other banks to consider are Wells Fargo and Bank of America.

Local Programs

Additional information about local programs that offer assistance to homebuyers is available at The Department of Housing and Urban Development.

 

 

 

 

 

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