We’ve talked to many clients over the past three years who all express the difficulty of having to come up with a down payment. Many experts recommend you put 15 to 20 percent down so that you can avoid paying a high premium for private mortgage insurance or PMI for short. For example, on a $200,000 home with 3% down, your expected PMI payment would be right around $150 per month in addition to your monthly mortgage payment.

Well, the data tell us something very eye-opening, and it’s that most homebuyers are paying less than 9 percent of the total amount. That’s why more and more people are looking for alternatives, to deal with this challenge. Now, we’ve made the dirty work for you; these are the best government programs that can make a difference for you. Stay tuned, this is important.

USDA Loans

This financial aid loan is made available by the U.S. Department of Agriculture, intended for those in rural areas so that they can buy homes with no down payment and no PMI. Most people would be shocked by which properties qualify for USDA loans. There is no down payment obligation, but there’s something you should know about, something called “the funding fee.” This is a protection item in case of default, equal to one percent of the whole amount, and you need to pay for it.

For example, if the property is valued at $300,000, you’ll pay about $3,000. Also, for these types of loans, your credit score is not taken into account. Since this involves zoning classifications, talking to a mortgage professional can better help you understand what will and will not qualify in your area.

The VA Loans

Accessible only for retired and active members of the US Army, known as the Veterans Affairs loan. These loans can be used to finance a purchase below $500,000, has a lower interest rate than those available on the market, requires no mortgage insurance and no down payment. The perfect opportunity for our beloved heroes to find the place of their dreams.

The “funding fee” is present here too, but this time it is below 3 percent. It can be paid right away or you can roll the funding fee into your total loan amount.

Navy Federal Credit Union

Navy Federal is a Top 5 VA Lender and will help you take advantage of every benefit you’ve earned as a service member. You must be a member of the Navy Federal Credit Union. A conventional fixed-rate loan is currently as low as 2.750%. Your interest rate is locked in if rates go up. If rates drop, you can relock at the lower rate within 60 days at no additional cost. Some mortgage options are available with no down payment or PMI. If you find a better rate with another lender, they will match it or give you $1,000.

0-3% Conventional Loans

A no down payment mortgage allows first-time home buyers and repeat home buyers to purchase property with no money required at closing except standard closing costs.

The HomeReady™ mortgage offers low down payment options with as little as 3% down. Backed by Fannie Mae and available from nearly every U.S. lender, the HomeReady™ mortgage offers below-market mortgage rates, reduced mortgage insurance costs, and the most innovative underwriting idea in more than a decade. Via HomeReady™, the income of everybody living in the home can be used to get mortgage-qualified and approved. For example, if you are a homeowner living with your parents, and your parents earn an income, you can use their income to help you qualify.

The Conventional 97 program is available from Fannie Mae and Freddie Mac. It’s a 3 percent down payment program and, for many homebuyers, it’s a less-expensive option as compared to an FHA loan. The entire 3% down payment can come from gifted funds, so long as the gifter is related by blood or marriage; or via legal guardianship or domestic partnership; or is a fiance/fiancee. Loan size may not exceed $484,350, even if the home is in a high-cost market. The subject property must be a single-unit dwelling. No multi-unit homes are allowed. The mortgage must be a fixed-rate mortgage. No ARMs via the Conventional 97.

The Conventional 97 program does not enforce a specific minimum credit score beyond those for a typical conventional home loan.

FHA Loans

Federal Housing Administration (FHA) loans are a bit complex to handle because the requirements are more strict when compared with the previous programs mentioned in this piece. To put in perspective, you’ll need to pay 3.5 percent of the total amount, also your debt-to-income ratio must be below 40 percent, and you must have a credit score higher than 560. One great advantage of this program is that you will be able to purchase a home valued up to $700,000. This is not possible when using other government programs.

Here at AFTHA, we can help you identify the best options for your actual situation. With years of experience helping clients achieve their homeowner goals, our experts are ready to help you.

Want to know more about the plan we have in mind for you? Call us now at (833) 478-1396, or write us an email to support@afthaprogram.com. This is your time to become the homeowner you’ve always wanted.

The Government Loans You Need to Focus On

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