There is nothing quite like homeownership. You have a chance to buy a place you love, decorate it as you please, and also make an investment into your financial future. But if you’ve ever looked into buying a home, you have probably heard experts saying that you need at least 20% of the value of the home in cash for a down payment.
With most homes valued at $300,000 or more, that means that you need at least $60,000 (and often more than $100,000) to give as a down payment.
Yet few people have $60,000. Even fewer have $60,000 that they can comfortably put down to purchase their home without worrying about their financial health. So how can you buy a home if you don’t have the 20% down payment?
Options for Low Down Payment Home Purchasing
There is some great news for homeowners. The 20% down payment requirement only applies to Conventional loans and is only to get a home without requiring “Private Mortgage Insurance,” which is a mandatory insurance that lenders require when you have less than 20% equity in the home.
It can be a good financial decision to make a 20% down payment if you have the finances. But rest assured, there are many other options. For example:
If the 3.5%, 5%, or 10% down payments are an issue, sometimes the money in retirement accounts, equity, and other investments may be able to go toward a home.
However, the key takeaway is that you do not need 20% down on the home. There are many different options for borrowers that require much less of a down payment. Contact me today if you’d like to learn more!
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