Are you planning to purchase a home in the near future? Is this your first home purchase? Have you already owned property in the past? If you are planning to buy a home, you may not need that looming 20% figure that a lot of people talk about. Here are some of our tips that will help you determine what down payment amount you need to consider.
The 20% rule has long been termed as the standard in the mortgage world, but contrary to popular belief, you need a 3.5% down payment with an FHA loan on a 30-year mortgage. The 3.5% down payment has provided relief to many new home-buyers who don’t have a large down payment to place on a mortgage. The percentage is a factor of the prices of the home and the loan size and the FHA county loan limit. Depending upon the area you live, the amount can increase and decrease for single-family loan options.
A conventional loan requires a 5% down payment amount, and another 5% is required if you purchase a home above a certain amount. For example, a loan up to $400,00 may require 5%, but the loan limit you need is $425,000; therefore you would need 10%, not 5%. All of these loan down payment requirements and option can be confusing, which is why our qualified experts are here to help clarify the loan options so you know what you need. It is critical to have up-to-date information about the loan limit in the county, understanding your finances, and having a good real estate mortgage agent working to get you the best loan.
If you are purchasing a home and you do not have a lot of money saved, call North Star Mortgage to help you find out what programs are available. Typically there are three elements to a mortgage that alter the payment; loan size, interest rate, and private mortgage insurance. Some things to consider include your debt-to-income ratio. Do you have manageable monthly debts like small balances on credit cards, car loan, and other payment obligations in addition to your current rent or home loan payment? The important thing to remember is that your income must be able to pay for the proposed mortgage payment for the price you need, along with being able to pay for all your other financial obligations. So, if you are carrying around a lot of personal loan debt, student loans, credit cards, and car loans, you will want to consider waiting to pay off as many of those debts as you can as it will free up your income to ensure you can pay for the loan amount you are seeking.
At North Star Mortgage, we are in the business of helping people! Our goal is to make sure we educate you about these down payment percentages while making sure we provide correct qualified offers that meet your financial situation. Contact our mortgage experts to discuss down payments, and let them help you on your journey towards home ownership!