Options for “low downpayment loans” are plentiful
By now, everyone that pays attention to the economy and the housing industry in particular has heard about how difficult it is obtain a home loan. It is a new lending environment where underwriting is more stringent and banks and their underwriters are more prone to over scrutinizing applicants than ever before. However, there are still options available that allow borrowers to obtain low downpayment home loans. In fact there are still a couple of options for ZERO down loans believe it or not. The VA will still guarantee financing to eligible veterans or active duty personnel. The VA loan allows for 100% financing provided the applicant meet the minimum credit standards which are somewhat more liberal than conventional guidelines. Also, USDA will allow for 100% financing using it’s Guaranteed Rural Development program. To qualify, applicants must meet not only the credit and income requirements but also be buying a home in a “rural area”. You can do a quick internet search–usda property eligibility–to find out which areas are covered by the program. Lastly, there are still 3% downpayment options for conventional financing and 3.5% for FHA loans which much like the VA loan, allow a little latitude on credit quality of applicants. After these programs, the options are ususally tiered in increments of 5%. For every 5% down, the terms generally will be better, meaning a lower rate or lower fees or both. Contact us to discuss any of these options in greater detail.