You do have a choice when it comes to down payments of less than 20%. Although not all lenders offer all types of loans, the following are a few of the options that may be available to you:
FHA Loans. One of the more popular no- or low-down-payment loans, an FHA loan is designed for first-time or moderate-income buyers and offers a low down payment of 3.5%. It does require mortgage insurance and a premium, however.
VA Loans. These loans that have no down payment and no mortgage insurance. For a VA loan, you must be a qualified veteran and will have to pay a fee that could be as much as 3.3%.
Conventional 97 program (Fannie Mae). This program has a minimum down payment requirement of 3 % and although it does require private mortgage insurance (PMI), it’s less expensive than the PMI for FHA loans.
“Home Possible” program (Freddie Mac). With “Home Possible”, a borrower can put down as little as 5 %. Also, the down payment can come from gifts from friends, family or other outside sources.
The Department of Agriculture's Rural Development loan program. These zero-down-payment loans aren’t just for rural development or farmland. With this program, there is a 2% fee and there are income limits.
“My Community Mortgage” program (Fannie Mae). Another Fannie Mae offering, this program offers a minimum down payment of 3%, although there are income limits. Much like the Conventional 97 program, it does require PMI.
Keep in mind that you’ll need to have good credit to take advantages of many of these loans. Also, be aware that other loans that don’t require a 20% down payment may require you to pay mortgage insurance. If you have any questions about any of these programs, please feel free to contact us!
For more than 25 years, Omega Financial has been serving mortgage clients in Massachusetts. Our brokers have approximately 50 years in the mortgage business. You always will receive fast, courteous, and accurate information. Omega Financial, Inc. is a company duly licensed to operate in Massachusetts as a Mortgage Brokerage. We are located in the Town of Norwood, Massachusetts where we have been operating as Omega Financial Incorporated since 1988. Licensed by the Commissioner of Banks - License No. MB2671