Low Down Payment Purchase Options

Is a large downpayment not in your budjet? There are options available that help you to still be come a homeowner.

Deciding on how much money to use as a down payment is not as easy as it sounds. Nationwide Mortgage Bankers Inc. can help. Situation and personal preferences are what an investor takes into consideration when determining which path is best for you.

Options for a Low Down Payment

FHA Loan

Purchasing a home with as little as 3.5% down payment is possible using an FHA loan, but there is a price for it which is mortgage insurance (often called PMI, private mortgage insurance).

PMI is usually required when the loan amount is at more than 80% of the purchase price (or in other words, putting down less than 20% of the full purchase price down). 

USDA Loan

Looking to buy the perfect house on the countryside on farmland with wide pastures? Depending on the location, you could take advantage of a USDA loan that requires no money down. As it is for other loans with less than 20% down there will be PMI attached to a USDA also and the household income will have to meet a certain level as well.

VA Loan

How much should I consider for a down payment?

Be sure to consider all the pro’s and con’s of each type of loan you are considering and be sure to talk to one of our representatives for our professional advice. Nationwide Mortgage Bankers Inc. will come up with a customized budget to fit each individual customers needs and situations.

Cost of a Lower Down Payment

Low or no down payment programs result in a higher monthly payment as a result of 2 main costs:

• Higher mortgage insurance premiums.
• Higher interest rates

The good news is, PMI insurance can be removed once you reach a sufficient amount of equity in your house which is usually over the 20% mark and a mortgage refinance.

Lower Down Payment Benefits

Though the disadvantages of low down payments sound troublesome, there also are advantages as well. 

The main benefits of lower down payment include:

• Less money out of pocket at the time of purchase.
• Higher rate of return. With a larger down payment your rate of return actually decreases.
• Opportunity cost. Sometiimes, a smart investor can make more money by placing available cash into other investments.

An the beginning of your mortgage, it’s possible to get back quite a bit of your money by declaring tax deductions at the end of the year due the high amount of money spent going towards paying interest.

Personal Consideration

Make sure you are certain about how much money you are prepared to put down. Knowing what you are capable of affording will help your lender determine if it works based on what you qualify for which is dependant on your income.

Talk to your loan officer at Nationwide Mortgage Brokers Inc. about the best situation for you.