If you’re a first-time buyer, you may be wondering, what is the minimum amount I need to save for a downpayment? Saving money when you’re paying for rent and other bills can be challenging, especially during times like these when inflation has left so many Americans strapped for cash. The good news is, there are first time buyers’ loans out there that can help! Here’s what you need to know.
Down Payment Requirements for First Time Buyers Loans
A recent study found that approximately 66% of American renters believe they cannot afford to buy a home in their city. People often cite not having money for a down payment as the main factor preventing them from buying a home. When you’re living paycheck to paycheck and trying to make ends meet, it can be hard to stash away money in your savings.
If this sounds like your situation, you’ll be happy to know that there are first time buyers’ loans that exist today that can help make home ownership more affordable. Many of these, such as FHA loans, have low down payment requirements. Here are the requirements for some of the most popular loan programs:
The most popular first-time buyer program is the FHA loan program. Federal Housing Administration (FHA) loans are government-insured mortgages that are designed to help first-time homebuyers with lower credit scores and limited down payment funds. The minimum down payment required for an FHA loan is 3.5% of the purchase price.
Veterans Affairs (VA) loans are government-insured loans that are available to active-duty military personnel, veterans, and eligible spouses. VA loans do not require a down payment, making them an attractive option for first-time homebuyers who qualify.
If you fancy the idea of living in the countryside, then a USDA loan could be perfect for you! United States Department of Agriculture (USDA) loans are government-insured loans that are available to low to moderate-income buyers in rural areas. These loans also do not require a down payment.
If you have good financial history and a decent amount of money in your savings, you may be able to qualify for a conventional mortgage. Conventional loans are offered by private lenders, and they are not insured by the government. The minimum down payment required is usually 5% of the purchase price. However, some lenders may require a higher amount. Conventional loans are praised for their attractive interest rates and terms and can be a great option for first-time buyers who can afford them.
Explore Options for First Time Buyers Loans
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