What is Down Payment Assistance?
Are you looking for home down payment information when beginning your path towards home ownership? You're wise to learn as much as you can about what's necessary early in the process. Read through the mortgage down payment information we have below and be sure to reach out with any inevitable questions you may have.
Just like any financial decision, there are positive and negative aspects of down payments. The situations in which down payments are required are as varied as the financial situations of borrowers. Learn more home loan down payment information, the benefits and drawbacks of making a down payment in many common situations and more below.
What is the biggest down payment myth?
Myth: It is necessary to put a full 20% of the value of your home down to qualify for a mortgage.
Fact: Some government backed programs (such as the FHA loan) allow borrowers to purchase a home with as little as 3.5% down. There are even government backed loan programs such as VA Loans and USDA Loans that require no down payment for some borrowers. While a larger down payment can lower future monthly payments, a 20% down payment is not always a requirement for home buyers.
What are the benefits of home loan down payment?
Many home loan down payment benefits require a borrower to be in a strong financial situation to be felt. For many families one of the best ways they can build a stronger financial future for themselves is through investment in their own home. Particularly in areas where rent is more expensive than home ownership, paying a hefty down payment up front is not as financially damaging as staying in the family's current situation. However, loans with low down payments can require expensive private mortgage insurance until the loan to value ratio gets to 80%. One downside to government backed loans such as VA Loan that allows for 0% down and no private mortgage insurance is that the home contains no equity and every dollar borrowed is a dollar that will require interest payments later.
More Information on Home Loan Down Payments
US Mortgages has been helping Coloradoans improve their financial situations for over 20 years. For more information on mortgage down payments, reach out online, or give us a call.