2 Loan Programs That Allow You To Buy A House With Little Money Down
ShareIf you do not have a large sum of money saved up, you may be under the impression that you will not be able to get approved for a home loan. While some home loan programs do require up to 20% down, there are also others that require much less than this. Therefore, you might be able to qualify for a home loan even if you do not have a lot of money. Here are two home loan programs you should look into if you are in this situation.
FHA Loans
An FHA loan is one that is approved through the Federal Housing Administration. The FHA insures these loans, which means the lenders that issue them do not have the normal types of risks when issuing these loans. The amount you will need for your down payment with an FHA loan is 3.5% of the purchase price of the house. For example, if you buy a house for $200,000, you will be able to get the loan by putting $7,000 down on the house.
As a borrower, you should be aware that there is a 1.75% fee you must pay annually for an FHA loan. This fee is for private mortgage insurance and is something you will have to pay each month.
VA Loan
The second option you might want to consider is getting a VA loan, which is a loan that is backed by the U.S. Department of Veterans Affairs. To qualify for a VA loan, you must be in the military or you must have served at some point in the past. The good news about VA loans is that they usually do not require a down payment of any kind. In other words, you might be able to finance the entire home with this type of loan.
You will not have to pay private mortgage insurance with a VA loan; however, you will have to pay a one-time fee, which is used to fund the VA organization. This fee is around 2% of the home's purchase price. The amount of the fee can often be rolled into the loan, but you might want to ask a loan officer about this to find out for sure how it will work.
Buying a house is a wonderful event in life, and it can be possible even if you do not have a lot of money to put down. To learn more about these loan programs and others, contact a mortgage lender today. Click here to read more.