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Finance a Home with Little Money Down

Authored By: Genisys Credit Union on 4/27/2016

Excited couple in front of new homeFor most first-time home buyers, coming up with funds for a down payment is the biggest obstacle to homeownership.  You have your regular monthly expenses.  You’re trying to maintain or save for an emergency fund.  Then there’s looking ahead to retirement and perhaps college tuition.  Amassing thousands for a down payment may seem impossible.

There is good news!  Before your lack of cash causes you to give up on your dream of homeownership, it’s important to know that you have options other than the standard conventional loan with a 20 percent down payment.  Few lenders offer zero-down loans today, but there are still some programs that allow consumers with good credit and a steady income to buy without making a minimal or no down payment.


Government Zero-Down Programs


Low Down Payment Programs

FHA:  With a minimum down payment of 3.5%, the FHA is a low-down payment option that's available to people with imperfect credit histories.

Unique features of FHA loan include:

Furthermore, the FHA supports homeowners who have experienced recent short sales, foreclosures or bankruptcies through the agency's Back to Work program.


The HomeReady Mortgage:  3% down payment

The HomeReady Mortgage is special among today's low- and no-down payment mortgages.

Backed by Fannie Mae and available from nearly every U.S. lender, the HomeReady mortgage offers below market mortgage rates, reduced mortgage insurance costs, and innovative underwriting guidelines.

Via HomeReady, the income of everybody living in the home can be used to get mortgage-qualified and approved.

HomeReady home loans were designed to help multi-generational households get approved for mortgage financing. However, the program can be used by anyone in a qualifying area or who meets household income requirements.


Conventional 95:  5% Down Payment

The Conventional 95 program is available from Fannie Mae and Freddie Mac. It's a 5 percent down payment program and, for many home buyers, it's a less-expensive option as compared to an FHA loan.

The Conventional 95 basic qualification standards include:


The Conventional 95 program does not enforce a specific minimum credit score beyond those for a typical conventional home loan. The program can be used to refinance a home loan, too. 

If you’re lucky enough to have family members with the means and generosity to give you money towards your home purchase, you can use some or all of their gift depending on your loan program. The Federal Housing Administration allows all of the required 3.5 percent down payment to come from gift funds.

You can also borrow from your retirement funds for a down payment, but be sure you follow the rules exactly so you don’t get hit with a tax penalty.


Unique Home Lender Programs

Many home lenders have unique programs of their own.  For example, Genisys Credit Union’s Your 1st Mortgage lets you borrow up to 95% of the home’s value with no mortgage insurance added to your payment.

Saving for a down payment is an important step in becoming financially prepared for homeownership, but you should also educate yourself on all of the home financing options that are available to you.

 

Schedule a FREE consultation with a Genisys Credit Union Mortgage Consultant to discuss your options and opportunities for financing a home purchase with a lower down payment.

 

© Genisys Credit Union and www.genisyscu.org, 2016.  Unauthorized use and/or duplication of this material without express and written permission from this site’s author and/or owner is strictly prohibited.  Excerpts and links may be used, provided that full and clear credit is given to Genisys Credit Union and www.genisyscu.org with appropriate and specific direction to the original content



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