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What Are My Down Payment Options for New Homes?

Buying a new home is very exciting. Besides selecting the perfect neighborhood and making sure you get the best house for you and your family, there are lots of financial things to take into consideration. One of the most important things to plan for is your down payment. Home loans come in all shapes and sizes. Let’s go over the most common top three options borrowers choose.

Down Payment Option One – 3.5%

One of the least expensive ways to get into a new home is by taking advantage of an FHA (Federal Housing Administration) government loan. This type of mortgage only requires that you put 3.5% down. On a $250,000, that’s only $8,750, which makes getting into a home extremely affordable, especially for first-time homebuyers. One thing to keep in mind with an FHA https://www.worldloans.online/300-dollar-loan/ loan is that you will have to pay monthly private mortgage insurance for the life of the loan. Private mortgage insurance (PMI) protects the lender in case of default – it’s not the same as homeowner’s insurance. This type of insurance is required when you put down less than 20%. But, even with the extra insurance, an FHA loan is still an excellent choice.

Here are the three top reasons so many borrowers choose this loan:

1. The interest rates on FHA loans are some of the lowest.

2. Your credit doesn’t have to be perfect, and you can get a loan if your score is in the low 600s.

3. Waiting time for bankruptcy is only two years.

Our government created FHA loans to help borrowers get into a home who may not otherwise be able to qualify. So if you’d like to put as little as possible down and would love to buy instead of rent , consider this type of mortgage. This type of loan is for your primary residence. You can’t buy investment properties or second homes with an FHA loan.

Down Payment Option Two – 5%

The next option is a conventional loan through Fannie Mae or Freddie Mac. With this type of loan, you need to come up with 5% down, which is a little bit more of a down payment than you do with an FHA loan.

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