- You can still get a conventional loan with less than 20% down, though in general these loans are more expensive for you in the short term and may be in the long term as well. If you put down less than 20%, you must pay mortgage insurance (known as PMI).
- The FHA loan program under HUD allows buyers to finance homes with a 3.5% down payment. Gift money is allowed here, which sets it apart from a conventional loan, and sellers can contribute up to 6% of the sale price toward closing. FHA programs also help those buyers whose credit isn’t 100% perfect, although buyers pay mortgage insurance with these loans, they offer great opportunities to people who might otherwise not have the chance to own a home.
- Qualified vets can get up to 100% financing with no PMI. Instead, a “guarantee fee” is built into the loan as insurance for the lender. Sellers can pay up to 4% of the purchase price towards closing costs, flexible income requirements, and forgiving credit standards, and you come out with a mortgage loan for our America’s vets.
- Not only for actual rural areas, the USDA loan program allows buyers to finance up to 102% of the appraised value of the property, and can include closing costs. Buyers will incur both a guarantee fee and monthly insurance fees added to the total loan amount, but these are reasonable costs that don’t detract from what is an otherwise amazing opportunity. The Rural Development program does have both income and property type restrictions.
