Traditionally homebuyers were asked to put twenty percent down in order to purchase a home. Nowadays there are many more options for homebuyers that require low down payments, anywhere from 5% down all the way down to $0 down. The drawback of not having a twenty percent down payment is the required mortgage insurance that comes with loans with less than 20% down.
Fannie Mae offers a 5% down mortgage that does not require upfront mortgage insurance costs and offers low private mortgage insurance costs. Another Fannie Mae program is HomePath Mortgage which gives homebuyers an opportunity to purchase a Fannie Mae owned property for as little as 5% down with no mortgage insurance.
Local Down Payment Assistance
Many local or federal government agencies offer assistance programs to help people, especially first time homebuyers, with the purchase of a home. Here in Illinois the IHDA offers several programs including SmartMove, for first time homebuyers, which offers up to $6,000 cash assistance to cover the down payment. IHDA also offers a program to help strengthen its communities by offering $10,000 down payment assistance for the purchase of rehabilitated homes in eligible communities (Building Blocks), as well as $10,000 cash assistance for Veterans and active military personnel (Welcome Home Heroes).
No Down Payment
Programs that offer $0 down include VA loans and USDA loans. VA loans offer military veterans low cost loans that often do not require a down payment. Another option for no down payment is the USDA loan which is for those looking to purchase a home in rural areas.
Contact me to learn more about low to no down payment mortgages options and see which loan program works best for you.