Home Purchase Down Payment Requirements On Mortgage Loans
This Article Is About Home Purchase Down Payment Requirements On Mortgage Loans
With the exception of VA and USDA Loans, all mortgage programs require down payment. Homebuyers find the down payment on a home purchase the biggest hurdle when it comes to a home purchase. Down Payment Requirements depends on the particular loan program. There are different down payment requirements on primary, second home, and investment properties. NON-QM Loans has different down payment requirements. Jumbo Loans and NON-QM Jumbo Mortgages have their own home purchase down payment guidelines. Most homebuyers can easily afford the new housing payment. However, coming up with the down payment is becoming a problem.
Costs Associated With Buying A Home
Saving is one of the hardest disciplines for most American consumers. Most homebuyers do not have to worry about coming up with closing costs. There are two costs when it comes to buying a home: The down payment and closing costs. Most closing costs can be covered with a seller concession or a lender credit from the mortgage company. In this blog, we will discuss the individual home purchase down payment requirements.
Difference Between Home Purchase Down Payment Versus Closing Costs
All purchase and refinance transactions have closing costs. Most borrowers do not have to worry about coming up with closing costs. This is because closing costs can be covered with sellers’ concessions and/or lender credit. However, home buyers do have to worry about the down payment. Down payments can be gifted by a family member. Using 401k retirement accounts for the down payment is allowed. With the exception of VA and USDA Loans, all home loans require a down payment. Home Purchase Down Payment requirements vary widely depending on the type of loan program and the type of occupancy.
Home Purchase Down Payment Requirements On Loan Programs
Down Payment Requirements depends on the particular mortgage programs. Here are the home purchase down payment requirements:
VA and USDA do not require down payment on home purchases. Both VA and USDA Loans allow 100% financing. FHA Loans require a 3.5% down payment for borrowers with 580 FICO or higher. Under 580 credit scores, FHA requires 10% down. Fannie Mae and Freddie Mac require a 3% down payment for first-time home buyers and 5% for repeat buyers. Jumbo Mortgages require 5% to 20%. Non-QM Loans and Bank Statement Loans require 10% to 20% down. Non-Warrantable condos require 20% down. Condotels require 25% down. Investment homes require a 15% to 30% down payment depending on the type of properties.
Hurdles With Down Payment By Home Buyers
Homebuyers who have hurdles with coming up with the down payment can use their 401k retirement accounts. Homebuyers can borrower up to 60% of their 401k value. The stock market hit an all-time high at 26,000. Many home buyers would be surprised at how much their 401k has appreciated Homebuyers are allowed to get gifted funds. 100% of gift funds can be used for home purchase down payments. Many home buyers normally use their personal earned savings or saved cash. Over 30% of home buyers use the equity from a prior home sale. Others use inheritance and/or gift funds for their home purchase. Many senior home buyers and baby boomers will use cash to purchase their homes. FHA requires a 3.5% minimum down payment on a home purchase with an FHA loan. Fannie Mae and Freddie Mac require a three to a five percent down payment on a home purchase. To qualify for a 3% down payment conventional home purchase loan, you need to be a first-time homebuyer. A first-time homebuyer is a buyer who had no ownership of a home in the past three years. Otherwise, conventional loans require a 5% down payment. VA and USDA loans are the only two mortgage loan programs that do not require any down payment on a home purchase. The higher the down payment, the less the lender has risk. The lower the down payment, the higher the risk for the lender and the higher the mortgage rates.
Down Payment Assistance Program
Gustan Cho Associates at Loan Cabin Inc. offers DPA Programs. There are grant programs where no repayment is required if the homeowner lives in the home for a certain amount of time. If the homeowner sells and/or refinances, the DPA funds need to be paid back. DPA Mortgage Loan Programs are different depending on the program, state, county, and city. Gustan Cho Associates also offers the Homes For Heroes Mortgage Program. Our Homes For Heroes Mortgage Program offers financial assistance to veterans of our military, police officers, firefighters, doctors and medical professionals, and teachers.