Potential first time homeowners wonder how much they would have to save to qualify for mortgage for building a home. The conventional home mortgage requires a minimum of 20% down payment. However, through different home buying programs, you could qualify for mortgage loans with low down payment.
What Is A Low Down Payment Mortgage?
First, a down payment is the amount of money, typically expressed as a percentage of the home purchase price. The mortgage lenders require a down payment as a mechanism for reducing the risk that comes with lending money.
A low down payment mortgage is exactly what is sounds like: smaller amount of money is requires for the home mortgage application to be accepted. Available through best mortgage lenders in Utah, low down payment home mortgages were formed as an initiative to achieve affordable homeownership. The low down payment home mortgage is ideal for people wanting to buy a home, but cannot afford the upfront money. Low down payment home mortgage allows first time or return home buyers to keep more cash-on-hand to avoid being house poor.
Are you wondering how you can qualify to get mortgage loans with a low down payment? Keep reading this post to discover the top secrets to get a mortgage with low down payment.
1. Understand The Options
The first item is to know the available low down payment home mortgages. Here are some of the alternatives:
● The FHA Home Loan
The FHA home loan is backed by the Federal Housing Administration and requires only 3.5% or 10% down payment, depending on your credit score. Besides being a low down payment home mortgage, the FHA home loan is a low credit score home mortgage, and applicants can qualify with a credit score of as low as 500. If your credit score is below 579 and above 500, you are eligible for the FHA home loan with a down payment of 10%. If the credit score is above 580, you can apply for the FHA home mortgage with a 3.5% down payment.
The FHA home loan is offered through the best mortgage lenders in Utah. In that regard, the applicant has to meet the eligibility requirements as set by the individual mortgage lenders. Moreover, you have to pay the mortgage insurance, meaning the monthly mortgage repayment, and the cost of the loan may increase.
● HomeReady Mortgage
Another mortgage loan with a low down payment is the HomeReady mortgage backed by Fannie Mae. The down payment requirement is 3% making homeownership a reasonable goal. HomeReady mortgage offers friendlier underwriting requirements compared to the conventional home mortgage. While the applicant has to pay monthly mortgage insurance, it is lower than what is paid for traditional loans.
● Conventional 97 Mortgage
The mortgage program is available from Fannie Mae and Freddie Mac and requires just 3% down payment. The home mortgage allows borrowers to use money from gifted funds to qualify for the down payment.
2. Check Your Credit Score
A credit score is a crucial indicator when borrowing a mortgage loan. Consider that the higher the credit score for some of the low down payment home buying programs, the lower the down payment requirement. Therefore, you should check the credit report and work on improving the credit score.
3. Talk To An Experienced Mortgage Broker
Mortgage brokers have good exposure of the lending landscape and understand different mortgage options. Approach an experienced mortgage broker who will assist in the evaluation of the various home mortgage loans. The mortgage brokers will also guide you in choosing the best mortgage lenders.
4. Consider Different Mortgage Lenders
At this point, you have an understanding of the different mortgage loans with a low down payment. The next step is to identify which mortgage lenders offer mortgage loans with a low down payment. You can research online or ask your mortgage broker to help shortlist the mortgage lenders offering mortgage loans with a low down payment.
5. Seek Mortgage Preapproval With Different Lenders
With the list of mortgage lenders offering loans with a low down payment, now it is time to seek mortgage preapproval. The objective is to find out the interest rates and other costs charged by the mortgage lenders. Choose the mortgage lenders offering a low down payment mortgage loan with lower interest rates and much friendlier mortgage terms.
6. Find Out Any Hidden Costs
Part of evaluating the best mortgage lenders in Utah, you need to look out for any hidden costs that come with the particular loan you intend to apply. Therefore, make sure you read the blueprint thoroughly. This lets you choose the best mortgage lenders in Utah while avoiding the more expensive mortgage lenders.
7. Choose A Reputable Lender
Finally, you can now apply for mortgage loans with a low down payment. However, remember to evaluate the reputation of the particular mortgage lender you intend to work with. The objective is to make sure that your rights, as the mortgage borrower, remain safeguarded.
Are you hoping to buy a home, but the 20% down payment requirement keeps you from attaining your goal? Low down payment mortgage loans can be the best enabler. Apply for a low down payment mortgage today.