|House Plan Weblog
Mortgage Loans with a 5% Down Payment or Less?
Posted On: 2009-07-17 at 02:14:15 PM
There are many loans available right now that offer a solution to almost every type of financial situation. This flexibility has helped sustain the housing boom and has allowed many people to get into a home they can call their own. Today most people can qualify for a loan that makes affording a home within their grasp.
One of the major obstacles to buying a home is the down payment. To qualify for a traditional mortgage, buyers used to need around 20% of the sale price to put towards a down payment. Times are changing and now there are some methods to transgress this old style of obtaining a mortgage. Buyers now have programs available, which will allow for 5% down or less toward their mortgage.
FHA and VHA Low Down Payment Loans
FHA and VA loans are the most common way people use to get into a home at a low down payment with VA being the less common of the two. To qualify for a VA loan you must be a veteran of the armed services. The vast majority of these loans are made with a 0% down payment. FHA loans are similar in that they are government backed and generally are made with a down payment of only 3%. A good rule of thumb is that a buyer can get into a FHA loan with a total cost of 5% of the sales price, down payment and closing costs inclusive.
The greatest drawback to these types of loans is that there are limits to the maximum size of the loan. These limits vary from area to area but generally are around $250,000. The consumer will want to check with their lender to see if the property they are looking for falls within the loan limit for their area. There are also extra fees that one would not find on most conventional loans. On a FHA loan the borrower must pay mortgage insurance and on a VA loan the borrower is charged a 2% funding fee.
Submitted by: Blogmaster