Can I Buy A Home With Less Than 20% Down?

Many people believe that if you want to buy a home, you have to have a down payment of twenty percent, which can often be very challenging for potential homebuyers to save up such a substantial amount of money. Even though making a twenty percent down payment will end up saving you more money in the long run, you can still qualify for a mortgage with a lower down payment amount. If you are thinking about buying a home in Knoxville, Maryville, Lenoir City, Oak Ridge, or Gatlinburg, Tennessee, and want to learn more about the related costs, Foundation Mortgage can help. Continue reading to learn more about your down payment options when buying a home.

Determining How Much To Pay For A Down Payment

The minimum amount you will pay for a down payment varies by your lender, however it is ultimately up to you to choose the down payment amount that you’ll be able to afford. Depending on the type of loan you receive, there are several loan programs that allow you to borrow funding with a down payment of less than 20 percent. It’s important to note that these programs charge a borrower mortgage insurance, which protects a lender if a borrower is unable to make loan payments. The following are some programs that borrowers become homeowners with a lower down payment:

● VA loans – Intended for military service members and veterans and insured by the federal government. VA loans do not require a down payment.

● FHA loans – Help borrowers that have a lower credit score qualify for a loan. They are backed by the federal government and have down payment options as low as three percent.

● Conventional loans – These types of loans are not insured by the government, however, they come with great rates and terms and have down payment options as low as three and a half percent.

● USDA loans – These types of loans are geared towards homebuyers in rural and more suburban areas. They offer zero or very low down payment options.

Tips On Saving For A Down Payment

The amount you make on a down payment will depend on both the type of home you buy and your unique financial situation. To begin saving funds for your down payment, you will want to deliberately plan and budget for that expenditure. You will want to prioritize reducing your current debt amount by paying down your credit card, student loan, car loan payments, etc., and you also will want to lessen any unnecessary purchases. You will also want to factor into your budget for additional costs of owning a home, such as homeowners insurance, closing costs, HOA fees, property taxes, home repair expenses etc.

If you are located in Knoxville, Maryville, Lenoir City, Oak Ridge, or Gatlinburg, Tennessee, and need assistance with your financing options, contact Foundation Mortgage today for a consultation.