For the first time since the great real estate meltdown, the federal government has made it easier for home buyers to purchase their own abode. The good news: now you can put as little as THREE percent down!
If you have reasonable credit, then the hardest part of home buying is coming up with the down payment in cash. It wasn’t too long ago when it was 20 percent down or nothing. The median home price here is $200,000. So you’d need $40,000 plus closing costs. In August of last year, the median income in America was just $53,891. How many decades would it have taken to save $40k?
The numbers are a lot friendly with just three percent down: $6,000.
Fannie Mae and Freddie Mac have programs with down payments starting at three percent. Federal Housing Administration loans require downs starting at 3.5 percent.
There are some caveats:
- Fannie Mae requires at least one borrower be a first-time buyer, which it defines as not owning a home for three years.
- Fannie Mae requires a minimum credit score of 620, while FHA’s minimum is just 580.
- All borrowers will have to pay more for primate mortgage insurance. Fannie and Freddie allow buyers to drop the insurance once they have 20 percent equity in the property, but FHA borrowers have to pay forever.
A five percent mortgage down payment will cut the private mortgage insurance monthly fee by more than half. So run the numbers. It may be cheaper to wait until you have $10,000 instead of $6,000.
But anything is better than 20 percent!!!!
((hugs)) BETH Ellyn
The Las Vegas Real Estate Concierge
Managing Broker, Nevada
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MBA: L’ecole du Hard Knocks
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