down payment
As a Realtor® who receives many inquiries from potential buyers, I often speak with people who have no knowledge of the home buying process or what it takes to buy a home. This is not a bad thing at all, for we all must be taught and educated on the process at some point.
If you are somebody who has never bought a home or obtained a home loan then you may not know how much money you might need to obtain a loan. You probably know that you need a “good” credit score and have to make a certain amount of money. Both are true, even if you don’t know the specifics. However, most people who are just getting started don’t know the down payment that will be required. Some still think a 100% loan or zero down payment is attainable. Due to the sub-prime mess and tighter oversight of the mortgage market that is now near impossible. There are some programs that may offer a zero down situation, but they have strict requirements. The most common zero down loan is a VA loan which is only attainable by past or present military personnel.
Now a days, the least amount of money you will need for a down payment is 3.5% of the sales price. This loan is a FHA (Federal Housing Administration) loan. That is why it is so common now when it was pretty much ignored during the housing bubble. It also explains why you might have heard how the Federal Housing Administrations funds were so low. It’s not just the foreclosures, but the extremely high amount of money being borrowed by home buyers. Other than the FHA loan you can obtain a conventional loan which will require 10 or 20% down. Usually the latter.
Yes we have extremely low rates right now, but your application and buying power is more scrutinized than ever. No investors want to purchase a loan that would be considered a risky loan. Your credit scores need to be higher, your down payment needs to be higher, and you must have a good “debt-to-income ratio”.
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Category : Blog