Down-Payment Options

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Generally the down-payment requirements start at 3 percent of the purchase price and increase from there depending on the price of the home and your own ability to come up with the cash. There are also a number of first-time homebuyer programs that are designed to help buyers who have not purchased or owned a home within the last three years, that require no down payment as well as “gift” down-payment programs available from some organizations. When calculating your down-payment needs don’t neglect to factor any out-of-pocket closing costs which can’t be folded into your mortgage into your up-front expenses. If you are a first-time homebuyer, saving up for  a down payment can be a daunting task. In fact it’s one of the biggest obstacles to home-ownership in the USA since the average mortgage payment on a first-time homebuyer or starter home is not much higher than a rental payment anyway. The good news is that lenders realize this and have made your options both flexible and extensive when it comes to offering mortgage programs that weren’t available a few years ago.
There may be other options available to you if you don’t have a down payment to buy a home. Lenders offer an unprecedented range of loans with 100 percent or sometimes more financing options with very attractive rates and flexible credit and income guidelines. Thanks to these programs the need to come up with a hefty down payment is no longer such an issue but still even 100 percent financing requires some financial commitment on the part of the borrower like covering closing costs, the cost of an appraisal and a home inspection.
If coming up with a down payment is a sticky point for you then a mortgage broker or lender can point you in the right direction, particularly if you fall into one of these categories:

• You have a strong source of income but not much savings.
• You prefer to keep your assets in higher-yielding investments.
• You have a low-to-moderate income and minimal cash reserves.
• You are a first time home buyer with high rent costs that eat up much of your cash.
• You are a move-up home buyer with minimal cash reserves.

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