When you first start looking into buying your first house, you’ll likely hear things like “you have to have money saved up to qualify for a mortgage.” While it’s true that having at least a 20 percent down payment will make it easier to get a great home loan, it’s not always required. In fact, you can buy a house without putting any money down to secure the loan. Here’s what you need to know.
Look Into Alternative Loan Options
There are many different types of home loans out there that offer benefits not associated with conventional mortgages. Use this to your advantage and research your options. You may qualify for a loan that doesn’t require much of a down payment if it requires one at all. For example, if you’re a qualified veteran, you can use a VA loan to finance your new house. There’s no need for a down payment of any kind. If you’re a low-income borrower or first-time homeowner, you may qualify for an FHA loan where you’ll only need to pay about 3 percent of the home’s sale price to secure the loan.
Apply for Down Payment Assistance
Believe it or not, most states have down payment assistance programs that will help you get the money you need to secure a loan quickly. Depending on your income level, you may qualify for a down payment grant that you can use when buying your first house. You never have to repay the grant which will help you keep your mortgage payments low. If you don’t qualify for a grant, you may be able to apply for a down payment assistance loan. This loan functions as a piggyback mortgage. You’ll make payments once a month until the loan is repaid in full.
Take Out Mortgage Insurance
When you’re buying your first house without a down payment, most mortgage lenders will require you to purchase private mortgage insurance. This insurance helps reduce their risk of loss if you default on the loan. It will increase your monthly premium payments, but that increase won’t last forever. Once you pay off 20 percent of the home’s sale price, you’re able to cancel the insurance.
Reach Out Now
If you’re thinking of buying your first house but don’t have the money saved up for a down payment, don’t panic. You can still get into the home of your dreams. Start your application online and let our team help you find the right loan for your first home.
