With interest rates and home prices as low as they are, it is a fantastic time to buy a new home! So why isn't everyone buying a home? One of the reasons is money. Not everyone has money for a down payment. I have heard news reports saying that you need 20% down - that's not true! You can buy a home for zero down if you qualify for the programs or as little as 3.5% down.
With FHA programs, you need 3.5% for down payment. That money can be money you have saved or it can be a gift from a family member. You will also need money for closing costs but you can ask the seller to pay for closing costs. At this time FHA still allows for up to 6% in seller paid closing costs. With FHA mortgages, you will have a upfront mortgage insurance premium and a monthly premium.
VA home loans are 0 down! You need to qualify for a VA loan, but if you do, they are a wonderful way to buy a home. The seller can pay up to 4% in seller paid closing costs. There is a VA funding fee added to your mortgage, but there isn't a monthly fee. The VA funding fee may be eliminated if you have any VA related disability.
USDA mortgages are also 0 down! To qualify for a USDA mortgage, you need to buy a home in rural areas. In Minnesota there are several cities that qualify for USDA loans - for example, Elko/New Market and Lonsdale are two areas that qualify for USDA morgages. There is a guarantee fee added to the mortgage and a monthly fee of .40% - much lower than FHA. You can also ask the seller to pay closing costs on USDA loans.
If you are buying a foreclosed home, you may want to check with the city or county you are buying in. There are some areas that have special programs that will give you money towards your down payment if you buy a foreclosed home. If you are a first time homebuyer, you should also check with the city or county to see if there are any special programs to help with the down payment.
Ask your real estate agent or your loan officer if they know of any special programs that might help you buy a home. With the current interest rates, it's worth seeing what you can do to buy now! Home prices and interest rates will go up, we just don't know exactly when!
