This ARTICLE On Home Purchase Down Payment Guidelines By Mortgage Borrowers Was PUBLISHED On August 21st, 2019
It is not a myth that the majority of Americans want to own their own real estate.
- According to the U.S. CENSUS BUREAU, is estimated that 64% of Americans do you own at least one home
- However, the majority of the remaining 36% wish they owned their own home
- One of the hardest hurdles to jump over in the homebuying process is saving up for the down payment. In this blog, we will detail the down payment requirements for each loan product
- Many Americans still think you need at least a 20% down payment to buy a home!
That is not the case. As you can see from the charts below, rent prices are only going up!
In this article, we will cover and discuss Home Purchase Down Payment Guidelines By Mortgage Borrowers.
Home Purchase Down Payment Guidelines On Conventional Loans
The following is the Home Purchase Down Payment Guidelines By Mortgage Borrowers by the type of mortgage:
Conventional Home Purchase Down Payment Guidelines:
- Conventional mortgages make up about 60% of the mortgage market
- So, these are the most common mortgage loans in America today
- There are many misconceptions about conventional mortgages and the down payment requirements
- If you are a first-time homebuyer, meaning you have not owned a home for the past three years, you can purchase a home with this little as a 3% down payment
- Freddie Mac and Fannie Mae offer loan products such as HOME ONE and HOME READY, for first-time homebuyers
- These are low down payment options, even lower than FHA
- If you are not a first-time homebuyer, you will need a minimum down payment of 5%
- Any conventional mortgage with less than a 20% down payment will require PRIVATE MORTGAGE INSURANCE
- Please see this article on mortgage insurance for more information on how private mortgage insurance is applied
- The majority of conventional mortgage is put down between 5% and 10%
- The advantage of using a 3% or 5% down payment conventional mortgage versus an FHA mortgage is the mortgage insurance is cancelable
You will pay mortgage insurance only until you have 20% equity in the property. Your mortgage insurance will automatically cancel. The minimum qualifying credit score for a conventional mortgage is 620.
HUD Home Purchase Down Payment Guidelines
FHA mortgages are commonly associated with first-time homebuyers.
- However, you do not need to be a first time home buyer to utilize an FHA mortgage
- The U.S. Department of Housing and Urban Development (HUD) oversees the Federal Housing Administration (FHA)
- FHA offers affordable housing options to American citizens
- You are only required to put down 3.5% of the purchase price for these loans
- FHA mortgages are more lenient for qualifications compared to a conventional mortgage
- They are more forgiving with late payments and have a lower credit score requirement
- You can even MANUALLY UNDERWRITE FHA mortgages
- As long as you have a 580 or higher credit score, you are eligible for a 3.5% down payment mortgage option
If your credit score is between 500 and 579, you will require a minimum of a 10% down payment.
VA Home Purchase Down Payment Guidelines
We offer VA mortgages without a down payment requirement to those brave Americans who fought for our freedom.
- This is one way the Department of Veteran Affairs helps our soldiers stay financially fit when they leave the service
- As long as you are eligible for benefits through the VA, you can purchase a home without a down payment. See the VA WEBSITE to check your eligibility
- VA mortgages do not have monthly mortgage insurance associated with them
- This usually results in the VA mortgage being the best option for a veteran
- You may only utilize a VA loan to purchase (or refinance) your primary residence
- The VA mortgage will not work for a second home or investment property
- We specialize in VA mortgages without any LENDER OVERLAYS
- There is not a minimum credit score requirement to enter into a VA loan
- Underwriters are analyzing the last 12 months of your payment history
As long as you have a clean 12-month history (no missed payments or collections), chances are you can get VA mortgage financing. Medical Collections are exempt from this 12-month rule.
USDA Home Purchase Down Payment Guidelines
The United States Department of Agriculture (USDA) incentivize Americans to live in a rule area.
- They do not require a down payment
- That’s right, even without serving in the military you can receive a mortgage without a down payment
- To check your area and see if you are in the USDA eligible zone, please click the following link, USDA ELIGIBILITY MAP
- USDA mortgages are not the easiest to qualify for
- There are strict household income requirements and lower debt to income thresholds
These guidelines are put in place to protect borrowers from default with the allowable 100% loan-to-value.
Non-QM Home Purchase Down Payment Guidelines
- If you do not know what a NON-QM mortgage is, please start by clicking our blog on TYPE OF NON-QM MORTGAGES
- These mortgages are not overseen by the government
- They have their own set of guidelines
- NON-QM loans can help borrowers with recent derogatory credit items such as foreclosures and bankruptcies
- The down payment requirements change based on credit score
- Rule of thumb is you need a minimum of a 10% down payment with credit scores above 660, 15% for credit scores above 600, 20% for scores above 540, and 25% for a score above 500
- However, we do offer a 95% LTV Jumbo mortgage
- See our article on 5% DOWN PAYMENT JUMBO MORTGAGE
These loans allow American’s to achieve homeownership even with bad credit. Please reach out to Mike Gracz on 630-659-7644 to see if a NON-QM mortgage can help you!
DPA Home Purchase Down Payment Guidelines
DPA Mortgage Programs:
- As previously discussed, saving for the down payment can be taught
- See the chart below, home values are on the rise
- Meaning you need to save more and more to buy a home
- The good news is Gustan Cho Associates offer Down Payment Assistance programs
- We offer a 2% GRANT and CHENOA DOWN PAYMENT ASSISTANCE
- These programs allow thousands of Americans to achieve the goal of homeownership
- However, nothing in this world is free, these programs typically are associated with higher interest rates. There are also specific income requirements
Please reach out directly to Gustan Cho team for more information
Saving is hard for most Americans. We have all seen the Articles we’re over fifty percent of Americans have less than $2,000 in their savings account. From statistics such as this, we can see saving for the down payment for a mortgage is tough. However, it is an investment for your future. every month you reduce the principal balance owed to the property. Building equity in a long-term asset will set you up for financial success. Our goal is to help credit-challenged Borrowers achieve the American dream. We are direct lenders without any lender overlays and are available seven days a week. 75% of our clients have been turned down by other lenders or are not getting the customer service they deserve. If you do not qualify today, we will set up a financial plan to have you qualify as soon as possible. Please call us how to set up your one-on-one consultation. Call or email Mike Gracz on 630-659-7644 or firstname.lastname@example.org to schedule an appointment.