Home ownership is a dream that millions of Americans have. But sometimes it can feel like it's out of reach. After all, most of us don't have the entire purchase price of a home sitting in our bank accounts – we have to take out a home loan in order to buy our house. And securing a home loan means actually qualifying for it, which isn't always easy. A lot of factors will influence your ability to secure a loan with a low down-payment, but one that will certainly come into play is the need for a down payment.
Traditionally, major loans from Government Sponsored Enterprises like Freddie Mac and Fannie Mae will often require as much as 10% down – sometimes more depending on things like your credit score, debt to income ratio, and other factors. At best, most borrowers will be able to secure a loan if they have around 5% of the total purchase price of the home as a down payment. But there are a lot of other options worth looking at.
Primarily, the Federal Housing Administration can often help you get a lower down payment requirement. As long as you meet basic guidelines like good credit scores, you can often secure a FHA loan with only a 3.5% down payment. This alone is a big reason that FHA loans with low down-payment requirements are so popular, and why so many people elect to utilize them. However, there are some other choices as well that you might want to consider.
For example, for some borrowers it's possible to qualify for a home loan without even having a down payment. VA loans and USDA loans are available and require zero down payment. If you are trying to lock into a loan but don't have a huge down payment to make, here are some things that you should focus on instead.
If you can keep these basic points in mind you should be able to find a loan that will work for you. Down payments may be required, but there are numerous finance programs available that won't ask for the standard 5 or 10 percent.
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