Long gone are the days requiring 20% down on a house. Thank goodness! Could you imagine the struggle of a generation full of college graduates working entry level jobs trying to stay on top of student loan payments trying to save up tens of thousands of dollars? Homeownership would appear to be a far-off dream that may not be achievable. So how much is needed for a down payment? That depends on what kind of home loan for which you qualify.
We have found that many first-time homebuyers are drawn to the FHA (Federal Housing Administration) home loan because of its less stringent requirements than other programs such as the convention home loan; the FHA loan offers lower down payment and lower minimum credit score requirements. In fact, the FHA was created during the Great Depression, it encouraged banks to give home loans to low-medium income families, first time homebuyers or those with a low credit score to boost the economy. The FHA loan has remained attractive for first time homebuyers, currently the down payment requirement is 3.5% for the FHA loan. So, if you were purchasing a home for $100,000.00 the down payment requirement would be $3,500.00.
While the FHA loan program may be popular amongst first time homebuyers, it is not the only option for them! There are even home loans that require no down payment; check out the blog post about No Down Payment Options. Many states recognize that it can be difficult in today’s economy to save for a down payment so to encourage their residents to move into home ownership they offer down payment assistance programs ranging from educational courses to grant money dedicated to assisting qualified home buyers. For more information on these programs please contact your local Stockton Mortgage Banker.
Be aware that the down payment is not going to be the only money you will need to obtain a mortgage. There are costs associated with processing the loan and ensuring the home is a good investment; these costs are the homebuyer’s responsibility. The costs are not outrageous but they certainly can add up and if you aren’t prepared for them it can be shocking. The best way to prepare yourself is to have the conversation with your mortgage banker and determine your “out of pocket” expenses including the down payment on the house.
I debated on sharing with you all the down payment possibilities but there are so many loan options out there that covering them all in this one blog post would be overwhelming and to be honest a bit dry—if you are interested in more information about purchasing a home, check out our webpage dedicated to help first time home buyers and veteran buyers alike. But if you are ready to talk to someone and get some questions answered, click the button below!