First-time home buyers are faced with a lot of decisions when they start looking into buying their first house. One decision that new homeowners need to make is how much money they will need for the down payment on the house. There are many different options available, and most people don’t know what they should be looking at in order to determine which one is best for them. In this article, we have compiled five of the top-down payment options available so you can find out more about them and decide which might be suitable for your situation!
FHA loans are a government insured loan which is often the best option for first time home buyers.
*They require a minimum of three percent down payment with an upper limit at six percent.
The borrower pays mortgage insurance premiums for as long as he or she holds onto the property, and there can be limited cash reserves required in order to qualify for the loan.
These loans make it much easier for borrowers to qualify and are often the best option when considering a down payment.
*You must be creditworthy to get one of these loans, but they can help you out with an affordable monthly mortgage payment that is usually lower than a standard loan would cost.
These loans are also government insured and require no down payment at all! However, they must be used on a home that is located in an area that qualifies as “served by VA.”
This means that the VA guarantees a portion of your loan so that if you don’t make payments, they will.
These loans are great for first-time home buyers because there is no down payment required, and monthly mortgage rates can be lower than other loans!
As with FHA loans, there can be limited cash reserves required to qualify for this loan.
These loans all come with a monthly payment, and the buyer pays interest on it over time. They are often great for people with bad credit or not many assets to put down as security to qualify for a loan. It is important to note that these loans usually carry an annual percentage rate (APR) of 12% or higher, so it is important to be careful when choosing this option if the buyer does not have a lot of money they can use as collateral.
These companies will lend you up to 95% of the price on purchase and require 20%-30% down payment in most cases. The lender will charge higher interest rates than conventional loans and will require more documents for approval.
These types of loans are great for borrowers who don’t want to put a lot of money down but still need more than what is typically offered with FHA, VA and many other types of government-backed loans.
New homeowners should be looking at this option if they have a lot of money saved up, but are wary about investing it in property because they feel like there are too many opportunities out there to invest their savings elsewhere.
Self-purchasing is also great for people who want to buy property but don’t have excellent credit or who can’t qualify for a loan through more conventional means.
This option requires the person to have enough money saved up to purchase the home, and it is not recommended as an option if you do not feel confident in your ability to manage this type of investment.
To have a good idea of which down payment option would be best for you, it is essential to know your credit score, and how much money you want or can put towards the purchase. There are many different options available, but they all require some sort of investment on behalf of the home buyer in exchange for lower monthly mortgage rates as well as more flexibility when it comes to qualifying.