You have options when it comes to how you finance your home purchase.
Oftentimes, when I’m out with buyers on first showings or holding open houses and discussing the market with potential buyers, I always hear the question, “Do I really need 20% down to buy a condo or house?” The short answer to that question is no. It depends on what you’re looking to do with it and which loan program you get. There are three major types of financing that most buyers will use:
Conventional loans conform to the guidelines by Fannie Mae and Freddie Mac. They’re able to be sold by the lenders that buy these loans to those government institutions. Needing 20% down is a myth. You only have to put down 20% if you’re buying an investment property. If you’re going to live in the property, the down payment can be as low as 5%.
FHA financing is available through the Federal Housing Administration. FHA financing has a higher debt-to-income ratio compared to conventional financing. Down payments as a first-time homebuyer can go as low as 3.5%.
- VA financing is financing for active duty and veteran military members. With VA financing, you don’t have to put any money down if certain requirements, like a termite inspection, are met.
If you have any questions about buying a home, your down payment requirements, or any financing requirements, please reach out to me. I look forward to hearing from you.