Down payment

Down payment - "How much of a down payment do I need and can it affect the amount of my monthly payments?"

There are many different mortgage programs that provide many different downpayment options. Some programs require the borrower to give 20% in order to qualify where other programs only require 3% down. Your mortgage professional can review your situation and give you the best recommendation for your situation.

Downpayment assistance programs may be available in your area. Please contact us at (888) 529-5506 for more information.

The amount of your down payment can affect your monthly payments in two ways. The more money you put down the lower your loan amount will be and you will qualify for a better interest rate. The lower interest rate in combination with the lower loan amount can drastically decrease your monthly payments.

When you apply for a 100% mortgage, a mortgage putting no money down, make sure you ask about closing costs. Many times when someone is obtaining a mortgage with 0 money down, they think that they do not have to pay any money out of their pocket at all to buy the home. However, there are still closing costs that need to be considered. There are ways to avoid paying closing costs as well. One way to avoid paying closing costs is to ask for a seller concession from the seller. This is where the seller pays for a certain amount, usually most or all, of your closing costs. Another way to avoid closing costs or to have them limited would be to see if yo can take on a higher interest rate so that you will not have to come up with any money out of your pocket at all. This option will not always work in all situations. Therefore, ask your mortgage professional what your options are for no closing costs as well as no down payment if this is something you are interested in.

Generally speaking, the more you put down towards a home purchase, the lower your interest rate will be. If you'd prefer to keep more of your own money in your pocket during the home buying process, ask your mortgage professional about 100% financing options.

FHA and VA Loans - FHA and VA loans are special programs backed by the government. They require little to no down payment and are designed to get first-time homebuyers into homes. Rates are often lower than other loan programs.

VA loans are only available to those veterans who receive their elligibility certificate from the Veterans Administration.

Although these loans offer low-down payment programs and other assistance, the interest rates are typicallly non-competitive with Fannie Mae conforming loans. VA loans are also often limited in the amount that a person can borrow.

In today's market, many lenders offer mortgage programs that are at least as attractive as the FHA/VA loans. So even if you don't qualify for one of these programs, your mortgage professional can likely offer you a financing option with very similar, if not better, terms.

An FHA loan allows you to buy a house with as little as 3% down, instead of the higher percentages that may be required by many conventional loans. Taking advantage of the FHA loan program is a great way for first time buyers to buy a home.

VA Loans are especially beneficial for purchases. Due to the VA Funding fee (typically 3% of the loan), ask your mortgage professional if a VA Loan is right for you in the case of a refinance.