Many people assume that in order to purchase a home, lenders will require a 20 percent down payment. For many people, saving up enough money for that amount of a down payment can be difficult. Although putting down a higher down payment is ideal, you can still be approved for a mortgage if you put down less than a 20 percent. If you are interested in purchasing a home in Knoxville, Maryville, Lenoir City, Oak Ridge, or Gatlinburg, Tennessee and want to know if you can purchase a home with a down payment that is less than 20 percent, Foundation Mortgage can help. Contact our office today to determine the best financing option for your situation.
How Much Down Payment Will You Need?
Every lender will have different requirements for down payment minimums, and it is ultimately up to you as far as what you are able to afford to put down. Although many lenders require a down payment of 20% to reduce their risk, there are several programs that allow you to borrow money and take out mortgage insurance even if you do not end up paying 20% down. There are several programs available that offer an opportunity to purchase a home for a lower down payment. Some examples include:
- Certain conventional loans, which are not insured through the government and have down payments as low as 3%.
- FHA loans, which are insured by the government, and require 3.5% down and allow borrowers who have lower credit scores still obtain a loan.
- VA loans, which are available to qualified military service members and have a 0% down payment.
- USDA loans, which are available to rural and suburban home buyers and have low down payments.
How to Fund the Down Payment for a Home
The type of loan you get and your down payment amount will depend on the type of home you want to buy and your personal situation. Saving money for the funding of a down payment on a home will take some planning and careful budgeting. First, you will want to try to reduce your current debt, such as money owed on credit cards, student loans, or car payments, and you will want to decrease your spending on non-essential purchases. When considering how much to spend on a down payment, it is important to note that you should avoid spending your entire savings on a down payment because you will also need additional funding for closing costs, property taxes, and homeowner’s insurance. You will also want to budget for any unforeseen expenses you may need, such as maintenance, appliances, and repairs.
Get Assistance With a Home Purchase and Down Payment
If you are interested in purchasing a home in Knoxville, Maryville, Lenoir City, Oak Ridge, or Gatlinburg, Tennessee, and want to learn more about your down payment options, contact Foundation Mortgage. We can work with you to determine your financing needs and find the best solution for your unique situation.