You Don’t Need a Down Payment

What's the biggest obstacle to homeownership for prospective buyers?

According to a recent survey, not being able to save up enough money for a down payment comes in at the top of the list. 55% of prospective homebuyers cited this as their main stumbling block to achieving homeownership.

With the continuing growth of home prices, things aren't getting any easier for them. In fact, homeownership rates reached a 20-year low last November.

It might be hard to imagine, but just a decade ago many lenders offered easy, no-money-down mortgages. Anyone with a pulse could qualify for one. However, after the financial crisis, mortgage standards have become more restrictive. A typical mortgage now requires a 20% down payment.

If you have decent credit and a steady income, you might also qualify for a number of specialized programs that require little or no down payment.

First, there's the USDA loan, which is valid for homes in certain regions, such as rural and suburban areas. With zero money down and lenient credit requirements, the USDA loan can be a great choice..

Second, there’s the VA loan, which you can apply for if you or your spouse served in a branch of the military. It's possibly the most generous zero-money-down mortgage because of low interest rates and low closing costs.

Third, there's the FHA loan. It does require a 3.5% down payment, but that is much more achievable than the 20% required for a conventional mortgage. There are also a number of credit unions and first-time homebuyer programs that might apply to your particular situation.

There’s one more important thing you should know. If you decide to get one of these no-money-down mortgages, chances are good you will have to pay private mortgage insurance, which can drive up your monthly payments. Private mortgage insurance will disappear after your mortgage balance is under 80%, and the money you do pay will be tax deductible in most cases.

As you can see, there are lots of options to make owning a home a reality for you, even if you haven't saved up tens of thousands of dollars.

If you need any advice on getting a no-money-down loan, give me a call at (859) 983-7999. I can put you in touch with some experienced lenders who can answer your questions and help get you started. I look forward to hearing from you soon.

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