Low Down Payment Loan Programs

Here’s the low-down on buying a house with a minimal down payment. 

These are excellent loan programs. I’ve highlighted some advantages of each.

HomePossible Advantage

  • Only 3% down payment.
  • You don’t have to be a first-time home buyer.
  • Can be a house or condominium.
  • You get the same low interest rate as the buyers with 20% down.
  • Reduced monthly mortgage insurance fee.
  • There is an income limit, unless the neighborhood is an area with low home ownership (called under-served area).
  • 620 credit score or higher.
  • Money comes from Freddie Mac (get the loan through your mortgage broker).

HomeReady

This is Fannie Mae’s version of HomePossible.

  • 680 credit score or higher.

FHA – Federal Housing Administration

  • Down payment is 3.5%.
  • 580 credit score
  • Bankruptcy Chapter 7 okay after 24 months discharge.
  • Can be a house, condominium, or manufactured home.
  • No education class required.
  • Has an upfront mortgage insurance fee of 1.75% that is rolled into the loan.

My Recommendation

I recommend speaking with a mortgage broker who will find the best and lowest priced loan that is available for you. Only a mortgage broker is required by federal lending law to get you the lowest interest rate available. Why? Because mortgage brokers shop wholesale lenders for you. Banks, credit unions, and direct lenders use their own money, so they don’t have the wholesale options. Therefore, they are allowed to charge you whatever they like (within limits). For example, today a home buyer received a quote from a direct lender (rhymes with Build Mortgage) with an interest rate of 5.5% whereas the mortgage broker’s rate is 4.5%.

If you are in Washington or California, I am licensed in those two states and would be happy to help you! (NMLS # 1284134)

You can apply online here.

 

 

 

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