Raising the cash for a down payment is the final hurdle many people face before making the choice to buy a home. In this week’s blog from Nickel City Funding, we will explore a few different low down payment mortgages to consider. When you’re ready to learn more about these options and get a free quote, schedule a consultation with our team. We help clients in North Tonawanda, Hamburg, Amherst, West Seneca, and Lancaster, NY.
Nonconventional Loans with Low Down Payments
Nonconventional loans are some of the best home financing options in terms of down payment. These government-backed loans are designed to help a broader array of people get approved for home financing.
FHA loans are one type of home financing with a low down payment – as low as 3.5% with a 580 or higher credit score, and 10% with a 500-579 credit score. Anyone with enough income and who meets basic other requirements can apply for an FHA loan.
VA loans are another nonconventional loan option for clients worried about down payment requirements – VA loans have none. Only veterans, servicemembers, and certain other family members of those who have served are eligible for VA loans.
USDA rural development loans, too, have no down payment requirement. It’s important to note these loans are only available for homes in certain rural and suburban zones and only to borrowers with low to moderate income.
Other Options to Secure a Low Down Payment
Typically, conventional loans – which are not insured by a government agency – require at least a 20% down payment. In some cases, we can help clients get piggyback loans for part of the down payment cost – usually 10%. You’ll pay for this loan just like you make payments on your primary mortgage.
Fannie Mae is a government-sponsored entity (GSE) with some great options for low down payment mortgages. The HomeReady program requires just 3% down payment, and it’s only available to qualifying first-time homebuyers.
It’s important to note that if you’re still struggling to raise cash for a down payment, most mortgages allow you to get your down payment from a friend or family member as a gift. For most conventional loans, you will need to pay for private mortgage insurance (PMI) until you have at least 20% equity in your home.
Contact Us to Get Started
When you’re ready to learn more about low down payment mortgages, contact the team at Nickel City Funding. We have partnerships with top national lenders who offer the most competitive rates and flexible terms. If you live in North Tonawanda, Hamburg, Amherst, West Seneca, or Lancaster, contact us to talk about your options and get a free quote.