Down Payment Options for First-Time Homebuyers

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Pre-Move

If you’re on the hunt for your first home, there’s probably one thing on your mind: finding money for the down payment. Providing a down payment is standard in the house buying process, but if you don’t have the ability to write a big check on the spot, then what do you do?

People are often discouraged from buying a house because they don’t have the cash to provide upfront. But good news! There are other options for first-time homebuyers.

20% Down payment

Ideally, every buyer has 20% of the purchase price to put toward their home. A 20% down payment means you can avoid paying private mortgage insurance (PMI); it will also lower your interest which, in turn, lowers your monthly payment.

 

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FHA Loan

Federal Housing Administration (FHA) Loans are a good option for people unable to provide 20% of the purchase price upfront. FHA Loans are also great for buyers with a low credit score and only require a down payment of 3.5%. For max financing, buyers normally need a credit score between 580 and 620; however, you can still qualify for a loan with 10% down if your credit score is in the 500s. Find out if you qualify for an FHA Loan here.

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State and Local Programs

There are state and local programs that exist to assist low-income families to purchase a home and help buyers secure a lower mortgage with low interest rates. A wide range of incomes qualify for these programs, so check if you can take advantage of these programs with the National Council of State Housing Agencies.

Buying a home is still possible when you don’t have the cash to lay down up front. Even though a down payment is ideal, there are other options to explore when purchasing your first home. Learn more about FHA Loans and State and Local Programs for first-time home buyers on Simple.Thrifty.Living.

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