VA Loans

There are several financial considerations you’re likely making while entering the market for a new home, and one of the most significant here for most buyers is the down payment. Referring to a percentage of the overall home purchase price that you will pay up-front in a lump sum format, your down payment is important for a number of reasons, including helping you get more favorable mortgage rates and terms for your loan.

At Primary Residential Mortgage, our team of loan officers is happy to assist with down payment savings and approaches for any of the loan programs we offer to our Guilford clients. What are some of the best approaches to ensuring you can afford a down payment that puts you in a quality position for your mortgage and financial picture? Here’s a primer in this two-part blog series.

Consider a Mortgage Program With Low Down Payments

For many borrowers, including first-time homebuyers, the biggest obstacle to homeownership is coming up with the required down payment. The good news is that there are mortgage programs available that allow for low or even no down payments. Here are some examples:

• FHA Loans: Offered by the Federal Housing Administration, these loans only require a 3.5% down payment for qualified borrowers. Keep in mind, however, that you’ll be required to pay mortgage insurance with an FHA loan, which will increase your monthly payment.
• VA Loans: Available to active-duty military members, veterans, and their surviving spouses, VA loans offer 100% financing. That means no down payment is required. You will, however, be required to pay a funding fee, which can be rolled into your loan amount.
• USDA Loans: Offered by the U.S. Department of Agriculture, these loans are available to borrowers in eligible rural areas and provide 100% financing. As with a VA loan, you will be required to pay a funding fee.
• Conventional loans: While many think of conventional loans as those that steadfastly require 20% down in all cases, this is not true in many circumstances. It’s often possible to get conventional loan down payments as low as 3% depending on your situation, something you should discuss as an option with your lender.

Consider State or City Down Payment Assistance Programs

For others, the issue isn’t necessarily that they can’t come up with the funds for a down payment, but rather that they would prefer to use their savings for other purposes, such as emergency funds or retirement. If this is the case for you, there are a number of programs available that can help with your down payment.

Local and state governments, as well as a number of nonprofit organizations, offer down payment assistance programs to help eligible buyers with the funds they need for a down payment. These programs often have specific eligibility requirements, so it’s important to do your research to see if you qualify.

While some of these programs are targeted specifically at low-income buyers or buyers in certain geographic areas, others are open to a wider range of buyers. Consider your options in your state if you’re going down this path.

For more on how to afford a down payment for a home, or to learn about any of our mortgage rates or quality home loan services in Guilford or nearby areas, speak to the pros at Primary Residential Mortgage today.

*PRMI NMLS 3094. PRMI is an Equal Housing Lender. Some products and services may not be available in all states. Credit and collateral are subject to approval. Terms and conditions apply. Programs, rates, terms, and conditions are subject to change and are subject to borrower(s) qualification. This is not a commitment to lend. Opinions expressed are solely my own and do not express the views of my employer.