Saving some cash to put down for a new home to buy can be challenging. A 20% downpayment is pretty big for many, particularly for those who are just starting to earn an income. But most experts recommend that amount for several reasons. For one, it avoids private mortgage insurance payment; for another, it helps to get a lower interest on home loans, Chandler, AZ.

If you feel like it may not be possible to save up that much, you are not alone. According to Realtor.com’s Dec 2018 data, the typical millennial homebuyers put down an average of 8.8% of their home’s purchase value.

If you still find 8.8% difficult, no worries – all is not lost. There are a few alternatives to a conventional mortgage in which you can buy a house without having to pay for a downpayment.

Here are your options for home loans, Chandler, AZ:

  • VA Loan – This type of loan is intended for active and former members of the military. It allows borrowers to buy a home up to USD 484,350 (2019 data shows) and it comes with a lower interest rate than a conventional mortgage. This type of loan requires no down payment and no mortgage insurance. However, the application comes with strict guidelines, including passing the “minimum property requirements” standard.
  • FHA Loan – Stands for Federal Housing Administration loan, which allows homebuyers to put down just 3.5% of the purchase price of a primary residence. But, it requires a credit score of 580 or higher; else, you will need a 10% down payment or higher. It must be noted as well that your debt-to-income ratio should be below 43%. Plus, you need to pay for private mortgage insurance.
  • USDA Loan – If you are living in a rural area planning to buy a new home, then you may want to consider the US Department of Agriculture loan. Like the VA loan, this does not require down payment. But there are certain income requirements that you need to qualify for. Further, there is no minimum credit score to obtain a USDA loan.

Final note:

Although the above-mentioned loans require little to zero down payment, there are still advantages when you put down some amount above the required. For instance, when you have some amount to put down for VA loan, the VA Funding Fee shrinks.

Talk to a HomePlus professional mortgage broker today if you want to know more about home loans, Chandler, AZ.

Call us at (800) 810-PLUS (7587)