Today I’m joined by a special guest: Scott from Loan Simple.
Together, we’re going to try to bust some down payment myths that are preventing future first-time homebuyers from transitioning into homeownership.
A lot of people tend to think you need a lot of money down to buy a house. However, this simply isn’t the case. Government programs like the VA, USDA, and the FHA can allow you to buy for little to no money down.
Down payment assistance programs that are available through FHA have income restrictions. This is the case for other loan products as well. Loan products tend to be more affordable for those with less income, but in many cases you can qualify so long as you make less than $80,000 a year.
Many county programs also exist. Typically, most loan products will ask you to have a credit score of about 640, but FHA allows a 580 credit score if you have a down payment.
Also, certain loan products will vary depending on the area in which you want to buy. For example, the USDA loan is only applicable for properties located in rural areas.
Some loans are even designed for specific demographics. As many people already know, the VA loan is specifically for veterans and active-duty military members, who can use the loan to purchase a home for no money down.
Also, be aware of things like closing costs, taxes, and insurance regardless of which loan product you plan to use. Many buyers can convince sellers to contribute to closing costs, so there are cases where you’re able to buy for next to nothing out of pocket.
You will still need to think about earnest money, but many people get this back at closing. No matter what, talk to your lender before you start looking. If you go through the underwriting process before you begin your home search, you will be saving yourself from a lot of trouble down the line.
This will help you avoid any disappointment and will keep you informed about what to expect moving forward in your home search.
If you have any other questions or would like more information, feel free to give me a call or send me an email. I look forward to hearing from you soon.