Low- And No-Down Payment Mortgage Options For 2015 Housing
Mortgage Rates Nearing All-Time Lows
2015 is projecting to be another strong year for U.S. housing. Home sales are rising, home supply is dropping, and prices are increasing in many cities and neighborhoods. Furthermore, mortgage interest rates are down.
30-year mortgage rates are below 4% nationwide and have fallen to their lowest levels since 2013, and are near to their lowest levels of all-time.
Lower mortgage rates yield lower monthly mortgage payments for today's home buyers. However, for many buyers, it's not the monthly payment which makes homeownership difficult -- it's the prospect of putting 20% down. And while many programs don't require a 20% down payment, homebuyers with less than 20% down will need to budget in private mortgage insurance.
FHA Mortgage: 3.5% Down Payment
The FHA mortgage is somewhat of a misnomer because the FHA doesn't actually make loans. Rather, the FHA is an insurer of loans. FHA mortgage guidelines are famous for their liberal approach to credit scores and down payments. The FHA will typically insure a home loan for borrowers with low credit scores so long as there's a reasonable explanation for the low FICO.
The FHA allows a down payment of just 3.5 percent in all U.S. markets, with the exception of a few FHA approved condos. Lower credit scores and "gifted" down payments are also acceptable with an FHA loan.
The FHA insures loan sizes up to $625,500 in designated "high-cost" areas nationwide. High-cost areas include Orange County, California; the Washington D.C. metro area; and, New York City's 5 boroughs.
Conventional 97: 3% Down Payment
The Conventional 97 program is available from Fannie Mae and Freddie Mac. It's a 3 percent down payment program and, for many home buyers, it's a less-expensive option as compared to an FHA loan.
Furthermore, the Conventional 97 mortgage allows for its entire three percent down payment to come from gifted funds. Keep in mind that this loan size may not exceed $417,000, and it must be a fixed rate mortgage. The program can be used to refinance a home loan, too.
VA Loan: No Money Down / 100% Financing
The VA loan is a no-money-down program available to members of the U.S. military and surviving spouses. Guaranteed by the U.S. Department of Veteran Affairs, VA loans are similar to FHA loans in that the agency guarantees repayment to lenders making loans which means VA mortgage guidelines.
VA loans also allow for loan sizes of up to $1,094,625 in high-cost areas. This can be helpful in areas such as San Francisco, California; and Honolulu, Hawaii which are home to U.S. military bases.
Home Buyers Get Low Mortgage Rates
See how today's low rates and low-down payment loans fit your budget. And, consider getting a no-obligation pre-approval for your purchase. NuVision Real Estate Consultants are available to answer all your questions, and find the best solution for you.
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