For many, including recent college grads or young families, having thousands of dollars in savings for a down payment is a challenge, but that doesn’t mean they can’t afford monthly mortgage payments. The good news is that a 20% down payment is not the barrier to homeownership that most prospective homebuyers think it is. There are other options — including a 3% down down payment mortgage which may be the perfect fit.
Are you looking to take advantage of a 3% down payment? Here are the three steps that you need to know.
- Talk to your lender. We work with thousands of lenders nationwide so there’s a good chance your lender offers a 3% down option though they may call it a different name. If your lender does not offer a 3% down loan, you may want to shop around.
- Plan to live in the home. To qualify, you must live in the home you are buying.
- Gather enough money. You must have funds to cover the down payment and the closing costs. The good news is that these do not need to be your own — the 3% down payment can come from a number of sources, including personal funds, gift funds, grants and affordable second mortgages. Last year, over 20% of 55+ homeowners said that they have helped family and friends with a down payment.
Take a look at the 3% down checklist from Freddie Mac below and see if you qualify.
Is a 3% down payment mortgage for you? Take a look at the 3% down payment mortgage checklist below:
Do you earn at or below the local median area income?
Are you planning to live in the home?
Is your credit ok?
Do you have funds to cover the down payment and closing costs? (they do not have to be your own funds)
But don’t despair if you didn’t place a check mark in every box. You don’t need to have everything to qualify. You still have a number of other choices. A growing number of today’s buyers are putting down between 5 and 10%. Sure, you’ll have to pay Private Mortgage Insurance (PMI), but you’ll be able to take advantage of historically low mortgage rates and affordable home prices in many parts of the country. Visit us at hfamiami.com/homebuyers for information on our first time mortgage and down payment assistance.