- 4 out of 10 people think you need a 20 percent down payment to buy a home
- Most lenders do not require a 20 percent down payment to buy a home
- New 1 percent down payment option
The home buying process can be intimidating and saving for a down payment on house can be the biggest obstacle, especially for First-Time Home Buyers. 4 out of 10 people have the perception that you need 20 percent of the purchase price saved in order to buy a house. Fortunately, there are home lending programs available that do not require a 20 percent down payment.
WHAT IS A DOWN PAYMENT?
According to Zillow.com “A down payment is the amount of money you spend upfront to purchase a home and is typically combined with a home loan to fulfill the total purchase price of a home. In addition your down payment amount, your credit score, credit history, total debt and annual income will influence how much of a loan you can qualify for.” The larger your down payment, the lower your mortgage balance will be, leading to lower monthly payments. Typically, it is recommended that you save 5 to 20 percent of the sale price in cash in order to qualify for a conventional loan and 3.5 percent of the sale price in cash to qualify for an FHA loan.
NEW 1% DOWN PAYMENT MORTGAGE LENDING OPTION
Recently, Quicken Loans partnered with Freddie Mac in offering a mortgage product called Home Possible, for loan to values up to 97% for well qualified buyers.
Here are a few highlights of the Home Possible program:
- 1%: No minimum client contribution is required. Gift funds ARE allowed for the 1%
- Buyer will receive a 2% grant (from Quicken Loans) allocated toward the down payment with no repayment back.
- 680 credit score minimum required
Under this program, qualifying clients can purchase a single family home, town home or condominium, and now have the ability to put as little as 1% down, while gaining 3% equity in the process. We think that is a pretty good deal. This means you could own a $150,000 home with as little as $1,500 down. To learn more about the Quicken Loans Home possible program, Contact Us.
Alex Vaughn, MBA
Alex Vaughn is a Short and Foreclosure Certified Realtor licensed in Florida and Michigan, serving the Miami, Fort Lauderdale, Florida and Metro Detroit, Michigan areas. Alex also holds a Master’s in Business Administration from Florida International University. You can reach Alex on Instagram and Twitter @iAmDAlex.