Some parts of the economy are reeling from the pandemic. However, the real estate market is not one of them. Mortgage applications are up as more and more people are looking to buy a home. Lots of people are rushing to take advantage of historically low mortgage rates and buy their dream home. Even still, some people are not rushing to fill out a mortgage application. One of the biggest reasons that people are hesitant is because they cannot put 20% down to buy a home.

Do You Need 20% Down?

The short answer is NO. You do not need to have the cash for a 20% down payment. Depending on the property you are looking to buy, you can put down as little as 3.5%. 

There are many varieties of loans in which you do not need to put 20% down. Let’s take a look at a few of them:

• FHA Loans: FHA loans are a special program by the Federal Housing Authority that help people who wouldn’t traditionally qualify. These loans are designed to help people without the cash for a large down payment. They can also be given to people who do not have high credit scores. You can qualify for an FHA loan with a credit score as low as 580.

• VA Loans: VA loans are given to people who have served in the military or their spouses. They are backed by the Department of Veterans Affairs. This means that they can offer low interest rates. It also means that you can acquire a VA loan with no down payment.

• USDA Loans: USDA loans are a program offered by the United States Department of Agriculture. They are designed to help low income families purchase a home in suburban or rural areas. These loans are attractive because they have low interest rates and you do not need a down payment.

What If I Do Not Qualify for Special Loans?

Even if you do not qualify for one of the special mortgage programs available, you probably do not need a 20% down payment. There are several factors that go into how much you need for a down payment:

• Credit Score: If you have a decent credit score, chances are that a lender will not require 20% for a down payment. The higher your score, the lower your required down payment will be.

• Debt to Income Ratio: Lenders care about your debt to income ratio. The number one thing that lenders are most concerned with is your ability to pay your mortgage. If you have a reliable source of income and you are not burdened with debt, you won’t need 20% down. 

• Having the Right Mortgage Broker: The old adage that it’s not what you know, it’s who you know, applies in this instance. Experienced mortgage brokers have relationships with many different lenders. The number one concern of lenders is making sure they write mortgages for people that will make payments. Lenders will give favorable conditions to clients of mortgage brokers if they have an extensive relationship with that broker. If a broker has a long history of helping the lender write good loans, they will work with the broker to find the solution. 

Picking the right mortgage broker can make the difference on whether or not you can get financing for your dream home. We have the ability to shop your loan to a variety of lenders and get them to compete over your business. We have long-standing relationships with many different lenders, our word can go a long way. Even if you do not have the cash to make a 20% down payment, chances are that we can still find someone who will give you a loan. 

If you are wanting to get a dream home of your own, contact us today. Do not think that your credit or cash on hand means you will not qualify. Do not deny yourself the opportunity to get a home. Trust the team at People’s Choice Mortgage, our experience, and our relationships. You are closer to your dream of owning a home than you even realize.