Most everyone is short on cash these days and with the low mortgage rates we’ve had in 2014, sometimes it makes sense to NOT put money down on a house.  Many times I have people say “I can’t buy a house because I don’t have 20% down”.  There are some lenders who still require that much down, but many don’t.  Here are 4 ways to purchase a home with less than 5% down.

  1. VA loans – I LOVE, LOVE, LOVE VA loans!  If you are a veteran and served as little as 6 months active duty, you may qualify for a VA loan.  These are loans with NO MONEY DOWN!  If you qualify with enough income, you can actually buy a home up to $417,000.  Best part of all?  There’s also NO MONTHLY MORTGAGE INSURANCE!   Mortgage insurance can save a borrower signficantly every month, which of course saves thousands of dollars over the life of the loan.  These loans are also available for refinances as well.
  2. USDA loans – My second favorite type of loan!  This is also a loan that has NO MONEY DOWN!  The primary purpose of these loans is to promote home ownership in rural areas so there are restrictions on where you can buy.  Good thing is that if you live on the outskirts of a metropolitan area, many times those areas are considered rural.  There are also income limits to this loan.  Check with me and I’ll let you know if the area you want is eligible and to make sure you don’t exceed income limits.  The loan has very, very low mortgage insurance rates – less than half of that of FHA.  It’s a great option for people!
  3. Native American loans – if you are a citizen of a Federally recognized tribe, then you are eligible for a Native American loan.  There are no “blood percentage”requirements, just need to make sure you have a card. The minimum amount down is 2.25% of the sales price.  There are purchase price limits and they are determined by which state the property is located.  The Federal government actually sets the land jurisdiction areas and not every state is available for these loans. These are a fantastic loan as they also DO NOT HAVE MONTHLY MORTGAGE INSURANCE!  This loan type is also available for a refinance transaction as well.
  4. FHA loans – these are what many people refer to as a “first time buyer” loan.  However many people, including those that have owned a home before, are utilizing this loan because of the low down payment requirement.  It also has a bit more relaxed underwriting guidelines than conventional loans, so when someone doesn’t qualify for a conventional loan, he or she might be able to qualify for an FHA loan.  This loan only requires 3.5% of the purchase price down.  It has monthly mortgage insurance, and has purchase price limits which vary by state, but there are no income limits or location restrictions.  These loans are also available for refinance transactions.

There you have it!  4 ways to buy a house in this VERY favorable mortgage market.  Each of the loans above have qualification requirements which vary depending on the type of loan.  Call today to find out which loan type works best for you!  Bank of Commerce, Mustang, OK  (405) 256-5110.

About the Author: Jolynn Craig

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