Choosing a Down Payment Option That is Right for You
When looking at purchasing a new home, one of the biggest questions that could come up is what to do about the down payment. There are many options for down payments so it is important to find the option that is right for your current situation and your future financial goals.
Look at Your Goals
Just because you have decided to purchase a home, it does not mean that your goals for that home are the same as every other homebuyer. You may be a first-time homebuyer looking for a starter home or you could be looking to right-size for your current situation. All of these factors will come into play when looking at your down payment options. If you are a first-time homebuyer you may be interested in programs with lower down payments so that you do not deplete your savings. If you are right-sizing, the equity you have built in your current home may allow you to put 20% down on the new home, although this may not be the right strategy for your current situation. Your dedicated Mortgage Consultant at Cambria® Mortgage™ is a great resource to help you look at your goals and find the right option for you.
An FHA loan, backed by the Federal Housing Administration, requires just 3.5% down. To qualify, you must have a minimum credit score and there are some upfront costs along with monthly premiums as well. Even with the additional costs, it may be the right choice for you especially since the FHA loan allows a gift to the homebuyer for the amount of the down payment. Often, the FHA loan will offer better rates than a Conventional loan with lower FICO score requirements.
Conventional Loan with 3% Down
As an incentive for first-time homebuyers, Conventional loans can now be acquired with as little as 3% down. With this option, there may be income limits and you may need a higher credit score than with an FHA loan, but the Conventional loan may still be the right fit for you.
Consider State and Local Programs
Many state and local programs are available for low- and moderate-income families and first-time homebuyers. These programs allow you to purchase a home with only a small down payment required. For example, with the Minnesota Housing Finance Agency you can purchase a home with as little as $1,000 down. You can inquire about available programs through your local or state housing agency, however, Cambria Mortgage and your Mortgage Consultant are experienced with these loans and can help you learn what programs and assistance are available for you with one simple phone call.
The VA loan is one of the most powerful lending programs available and is reserved exclusively for veterans, reservists, and active duty personnel along with their eligible spouses. Cambria Mortgage specializes in VA loans and considers it an honor to help veterans get all the benefits they’re entitled to for service to our country. Part of the benefits of a VA loan include no down payment. If you are eligible for a VA loan, this is a perfect time to call and work with one of the Certified Military Housing Specialists at Cambria Mortgage.
USDA Rural Development Loan
If the property you are interested in is located in a designated area, it may qualify you for a USDA Rural Development loan. With this loan, there is the potential for no down payment and no mortgage insurance, but the properties that qualify are typically outside of the metro area. Work with your Cambria Mortgage professional to see if the property you are looking at qualifies you for this program.
Call Cambria Mortgage
To get started, call Cambria Mortgage at 952-942-0110 or visit CambriaMortgage.com. Our team of experts will provide personal, hometown service with sound advice and impeccable attention to detail at every step of the process.