If you're buying a home for the first time, you should know the answers to the five common mortgage down payment questions. Buying a home is no easy process, and one of the biggest stumbling blocks for first-time buyers is the down payment. Fortunately, with a bit of research, you'll be an expert on these five common mortgage down payment questions.
- Do I always need a down payment? Unfortunately, yes, you almost always will have to come up with some money for a down payment if you are taking out a loan with a traditional mortgage lender. The days of zero-down-payment loans from traditional lenders ended with the recent housing crash. However, there are a few exceptions.
- What loans can I take out without putting any money down? If you're a veteran of the military, or currently serving in the U.S. Armed Forces, you can apply for a mortgage loan insured by the U.S. Department of Veterans Affairs. These loans, known most commonly as VA loans, do not require down payments. You can read about the eligibility requirements of these loans at the housing site run by the department.
- Are there any other no-down-payment loans? The U.S. Department of Agriculture, through its Rural Development program, offers no-down-payment loans. You'll have to find a home that is an eligible area for the program, though. You can determine if the home you are considering is eligible by logging onto the department's guaranteed home loan page.
- How much will I have to put down? This varies, but most traditional lenders will require you to supply a down payment of 20 percent of a home's down payment. If the home you'd like to buy costs $200,000, you'd have to come up with a down payment of $40,000. You might, though, be able to find a traditional lender still offering loans that require down payments of just $5,000.
- What about loans insured by the FHA? If you take out a loan insured by the Federal Housing Administration, you'll only have to come up with a down payment of 3-and-a-half percent of a home's purchase price. For more information on these loans, visit the administration's home loan page.
Once you know the answers to these five common mortgage down payment questions, you can shop for a home, and the mortgage loan you need to purchase it, with confidence. After all, you'll be a step ahead of most other buyers.
- U.S. Department of Veterans Affairs Guaranteed Home Loans: http://www.homeloans.va.gov/
- USDA Rural Development Guaranteed Home Loans: http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do
- Federal Housing Administration Home Loans: http://portal.hud.gov/portal/page/portal/HUD/topics/buying_a_home