Can I Get A Home Loan Without Putting 20 Percent Down?
Research consistently shows that the number one thing holding renters back from buying is an inability to save for the required down payment. This is due, in part, to a long-held belief that the only good down payment is one of 20 percent or more. Unfortunately, with the average home in the United States selling for $311,400 these days, saving 20 percent is no easy feat. As it turns out, however, the 20 percent down rule is a myth – and more and more buyers are taking advantage of home loans that offer much lower down payment options:
The Federal Housing Administration allows first-time buyers to put down as little as 3.5 percent on a home purchase. This government-backed program applies to both single family and multi-family homes, making it flexible for a wide array of prospective buyers, though some restrictions may apply to certain applicants.
Conventional 97 Loan
A Conventional 97 loan only applies to owner-occupied, single family homes. Much like an FHA mortgage, this loan program is backed by the government, meaning the lender takes on less risk even with a down payment as low as 3 percent. At present, a Conventional 97 is only available through Fannie Mae.
A 20 percent down payment is not mandated by law, so many banks and credit unions offer local programs to gain new business through offering down payment assistance to hopeful homeowners. Start by simply asking your own bank about opportunities, but be sure to call around to compare programs through other local lenders. Just remember to do your homework before landing on the loan program that is truly right for you.
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