Buying a house has never been this easy – and affordable. Before, you need to put down at least 20% cash to avail a home purchase. But now, you can become a proud homeowner even if your budget for the down payment is less than 20%.
By availing one of the different mortgages available, you can now afford to buy a house. Let’s take a peak on three of the common home loans out in the market.
FHA Mortgage Programs
FHA insures some of the most affordable home loans we have nowadays. By applying for FHA Loans Midland Texas, you get to make your American Dream of owning a house a reality. Such mortgage accommodates first-time homebuyers who have at least 500 FICO score.
For homebuyers with a credit score between 500-579, you’ll need 10% down payment. For example, you plan on buying a house worth $250,000. You’ll need $25,000 down payment. For those with a FICO score of 580 or higher, you can avail the mortgage with 3.5% down payment. This means you only need $8,750 down payment.
Another remarkable thing about FHA loans is that they allow down payments to be gifts. The funds that your mortgage lender will accept as down payment gifts may come from your relative, employer or friend – provided this is not a loan. The funds need to be in your bank account for at least three months before your FHA mortgage application, and proper documentation is required as your lender will verify the authenticity of the gift.
Good Read: The Rules for Documenting Mortgage Down Payment Gifts
The US Department of Agriculture offers this type of mortgage for homebuyers in rural and suburban areas in the US who have low to moderate monthly income. This means if you plan on buying a house in metropolitan areas, then USDA mortgage is not what you need. While the home you’re buying needs to be in a USDA eligible location, almost 97% of the country is USDA-approved.
Such mortgage is less expensive than other home loans thanks to its zero percent down payment and cheaper Mortgage Insurance. This means you can apply for a USDA loan and the mortgage will finance up to 100% of the home value. This way, the excess funds will apply to the closings costs.
For active and retired vets, one can apply for VA loans made available by the Veterans Administration. They require no mortgage insurance and zero down payment. Such home loan has no prepayment penalties and has lower average interest fees compared to other home loans. This makes it an excellent mortgage program for first-time homebuyer eligible for VA Loans.
Recommended Read: VA home loans: Everything America’s military veterans need to know
The appraisal for a VA loan does not guarantee the state of the house you’re buying. This means it is not a home inspection that will tell you the condition of the property. You’ll need to arrange for the home inspection so you can find out the repairs in order and negotiate with the seller.
If you’re in search of some of the most affordable mortgage programs out there, consider FHA loans, VA loans, and USDA loans. Know their pros and cons, see which mortgage you are eligible of getting approved and find a good lender who can help finance your home purchase.