Down Payments

When it comes to investing in a mortgage, the down payment is key in making your investment a reality and proving to lenders that you’re a safe bet. However, while most opportunities for putting zero down on a home have disappeared since the recession, there are still a few ways to buy without putting money down. If you’re currently weighing your options, here’s what you need to know if you don’t have a down payment ready.

Loan Programs With No Down Payment

There are still a number of zero down loan programs for those who qualify. Veterans and families of veterans can often qualify for a VA loan if they prove military service. The United States Department of Agriculture also offers the USDA Rural Development Housing loan, which is designed primarily for low-income buyers looking at homes in rural locations.

What Are The Requirements?

The requirements to get a zero-down loan vary, but because they involve a more significant financial risk for the lender, there are often many restrictions. In many cases, the homebuyer will be required to prove that they have the money to re-pay their loan and they will also have to have a good credit history. As well, because of the convenience of no money down, the homebuyer will likely be paying a higher interest rate than they would if they provided a down payment.

Should You Invest In Zero Down?

The idea of not having to put money down can be very enticing for many homebuyers, but this means that you will be paying a higher monthly payment and have no equity in your home to start out. If you are set on buying a home in the near future but don’t have the money for a down payment, you may want to look into these or other low down payment loan programs. It may also be worth holding off until you’ve saved up as this can be a more financially sound decision for your future.

There are a number of benefits to not putting money down on your home and getting into the real estate market more quickly, but it’s important to consider what’s financially beneficial for you before choosing a zero-down option. If you’re currently on the market for a home, contact one of our mortgage professionals for more information.

If you’ve been perusing the real estate market with the hope of purchasing a home, you may be aware that the often-touted amount you should put down is 20 percent. However, there are good things and bad things involved in investing so much money into your new home. If you’re wondering how to decide on your down payment amount, here are some things to consider before putting in 20 percent.

No Rainy Day Fund

It might seem like the best option is to put down as much as you can, and use up your savings if needed, but putting all of your money into your home can be a mistake. While you may not foresee any financial issues arising in the next few years as you pay down your mortgage, not having any extra money can put you in a vulnerable position if the market shifts or other life issues appear. Investing in a home is a good choice, but you may want to protect some of your other assets.

Lowering Your Monthly Payment

While putting down the full 20 percent can seem like a huge chunk of change, it can be a boon for your monthly finances in the sense that your monthly mortgage payment will be automatically reduced. While this is a good thing and can make your monthly amount more manageable, it’s important to remember that your monthly payments should be affordable and you shouldn’t be stretching for extra house because you can. Make sure you’re buying a home you can afford, with or without 20 percent.

Avoiding Mortgage Insurance

Putting less than 20 percent may seem like a good decision if you’re ready to buy a home and don’t quite have the money saved, but putting less down can actually increase the cost of your home overall. Because you’ll have to pay mortgage insurance if you put down less, this will add to your monthly payment and will be money that you can’t get back. If you’re ready to dive into the market, you may want to move forward, but it can also be a better investment to wait and save a bit more.

20 percent is often the magic number when it comes to a down payment, but there are pros and cons associated with putting this much money down. If you’re currently in the market for a new home, you may want to contact your local mortgage professionals for more information.