As you begin your search for a home to buy, you are going to have a lot of financial factors to consider. One of the biggest is your down payment. How much of a down payment do you need? Can you buy a home without a big down payment? The answers to these questions may not be what you expect. Read on to learn about down payments in today’s real estate market.
Down Payments Explained
1. 20% is still preferred.
There are other ways to buy a home with less than 20%, but there is also no denying that lenders love buyers with at least 20% down. Having 20% makes you look strong on paper, and therefore less of a financial risk. You can buy a home, usually with a good mortgage rate, and you can avoid having to pay private mortgage insurance (PMI).
2. There are lending programs for those without 20%.
A little research will show you a variety of lending programs designed for new buyers who may not have 20% down. The Federal Housing Authority (FHA) loan program is probably the most popular of these. FHA loans require lower down payments—sometimes as low as 0%–and are accessible for those with less than perfect credit.
Veterans Administration (VA) loans are another popular program. Veterans and active duty military can often get great rates and little to no down payment requirements through the VA program.
3. Your credit is equally important.
Remember, the down payment is only part of the buying process. You still need good credit to get a low-interest rate. If your credit is bad, consider taking some time to improve it before you buy.
Are you looking at homes for sale in the Tri-Cities, WA, area? Contact us today for help finding a home and for information on the right loan programs for you.