Heard about loan down payment loans? Wondering if you are eligible and how to get one?

We asked the Federal Government to provide us with information on how to get a home loan with a down payment under the traditional 20 percent.

We know: 1-Minute Lesson On Low Down Payment Loans

What does a ‘low down payment’ home loan mean?

Often times, lenders ask for down payments of about 20 percent of the price of the home when you get a mortgage.

However, if the mortgage is insured, lenders will often grant home loans to a qualified buyer for as little as 3 to 5 percent. Under certain circumstances, it is even possible to get a 0% down home loan!

What is mortgage insurance?

Mortgage insurance protects the lender if you stop paying on your mortgage or default. The cost of mortgage insurance is paid by the home buyer, you, for the protection of the lender. So, mortgage insurance makes lending money safer for the lender, and makes buying easier for the consumer.

Where to I get mortgage insurance and a low down payment mortgage?

Low down payment mortgages can be insured in two ways. One way is through the government, the other is through the private sector.

Tell me about the government programs.

Here are the 3 types of government-backed home loans that are available:

  • FHA (Federal Housing Administration) minimum down payment is 3 percent, program is for single-family homes, limits on home price
  • VA (Veterans Administration), limited to qualified vets and reservists
  • US Department of Agriculture Rural Housing Service, insures loans for construction and purchase of homes in rural communities

Tell me about private mortgage insurance.

Private mortgage insurance is available on a wide variety of low down payment home loans. There is no pre-set limit on the loan amount.

What do I need to qualify for a low down payment home loan?

Generally, you need:

  1. enough income so you can make the monthly payments
  2. enough cash to cover the down payment
  3. a good credit background
  4. a house where the appraisal value is at least equal to the purchase price
  5. enough cash for the closing costs, which can run 2-3 percent of the housing price
  6. a cash reserve to cover 2 monthly mortgage payments (not always required)

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