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Prospect Financial Group, Inc.

Low Down Payment Loan Options

Wednesday, July 16, 2014 - Article by: Prospect Financial Group, Inc. - Message

A common misconception about buying a home is that qualifying for a mortgage requires a 20% down payment. This idea stems from earlier mortgage requirements when rates were higher and restrictions stricter. Now is a time when the government realizes the importance of healthy stimulus to the mortgage market as a way to keep the economy stable. With this knowledge, there is a push to make homeownership available to as many people as possible. Hence, no need for a 20% down payment requirement that puts owning a home out of reach for thousands of Americans.

In the modern world, deciding whether or not you can afford a home is about monthly payments more than about a down payment. While it should be noted if you aren't able to put a lot of money down, it shouldn't be the only thing put into consideration.

When a borrower puts down less than 20%, they are required to pay private mortgage insurance (PMI). PMI is a policy that is paid to lenders in order to protect lenders from default mortgages. The amount that you pay in insurance will depend upon the size of your downpayment, location, and credit score.

Don't let the fact that you'll be paying PMI keep you from getting a mortgage. If you spend too much on your downpayment that you're depleting your savings, you won't have any money to deal with all of life's speed bumps. Making a downpayment of less than 20% can be financially conservative and in some ways a good deal.

Low down payment loan options include FHA loans, VA loans and USDA loans. If you would like to find out if you are eligible for one of the low down payment home purchase options listed above, contact Prospect Financial Group, Inc. today at 858-605-0952.

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