Low Down-Payment Programs
For many people, especially
first-time buyers, "the lack of a down payment is the typical
hurdle" to homeownership, said Steve O'Connor, senior director of
residential finance at the Mortgage Bankers Association of America. Today,
however, there are numerous special programs with low down payments, some
specifically designed for first-time homebuyers.
According to the Mortgage
Bankers Association, there has been an expansion in the past few years of
mortgages with low 3 percent down payments. You should check with your
bank or financial institution about the requirements for any low down
payment loans or first-time buyer programs they may offer.
You can contact these agencies directly for more information, or ask your
mortgage banker or broker:
This major publicly-chartered corporation that buys mortgages from
lenders and sells them to investors offers a mortgage known as Fannie
Mae97, which features a loan-to-value (LTV) percentage of 97 percent. It
requires a 3 percent down payment on either a 25- or 30-year fixed
mortgage. It is primarily a loan for people with modest incomes who want
to become homeowners. Borrowers must take a pre-purchase homebuyer
education session to qualify for this loan.
This agency of the Department of Housing
and Urban Development insures residential mortgage loans made by
private lenders. With FHA insurance, you can buy a home with a down
payment of from 3 percent to 5 percent of the FHA appraised value or the
sale price, whichever is lower. FHA mortgages have a maximum loan limit
that varies depending on the average cost of housing in a given region.
Check out the latest bankrate.com survey of FHA
mortgage interest rates.
The VA guarantee allows qualified veterans to buy a house that
costs up to $203,000 with no down payment. In addition, the qualification
guidelines for VA loans are more flexible than those for either FHA or
conventional loans. To determine whether you are eligible, check with your
nearest VA regional office.
This agency of the Department of Agriculture provides financing to
farmers and other qualified borrowers buying property in rural areas who
are unable to obtain loans elsewhere. It offers low-interest-rate loans
with no down payment to borrowers with low- and moderate-incomes who live
in rural areas or small towns. Check with your local RHS office.
State and local
Many states or local housing agencies sponsor programs to help
first-time homebuyers who meet specified income guidelines. These programs
offer loan terms with a low down payments and/or low interest rates. Some
state and local programs also may offer down payment and closing cost
assistance. Check with your state or local housing authority.
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