December 14th, 2018 12:04 PM by Jackie A. Graves, President
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First-time buyer surveys consistently show the top hurdle to
homeownership is saving up for the down payment. But potential home shoppers
may be misunderstanding the amount of money they really need to buy a home.
“Paying 20 percent down
is, quite frankly, a myth,” Karen Hoskins, vice president at NeighborWorks,
told HouseLogic. “Most buyers pay only 5 percent to 10 percent down—some even
assistance programs exist to help buyers with down payment concerns break
into homeownership. For example, 69 percent of about 2,500 homebuying programs
tracked by Down Payment Resource offer down payment assistance. The average
amount of assistance from these programs tops $11,000.
offers several places where buyers can search for down payment assistance,
including through national government programs. The Federal Housing
Administration offers loans to first-time buyers with down
payments as low as 3.5 percent. Programs like the USDA Rural Development Loans and VA Home Loans offer eligible
buyers zero down payment loans.
financing giants Fannie
Mae and Freddie Mac offer eligible buyers loans
where they can put down as little as 3 percent of the purchase price. When
buyers put down less than 20 percent, they pay private mortgage insurance each
month to protect the lender’s interest.
and local homebuying programs offer assistance programs too. There are many
different forms of assistance, such as forgivable loans and grants (gifts for
some or all of the down payment and closing costs) to soft mortgages (down
payment assistance loans that are deferred for some period of time based on the
To find a
program, HouseLogic recommends NeighborWorks, which provides housing
counselors to discuss mortgage options for free, and the Down
Payment Resource, where buyers can check their eligibility for
assistance programs. Mortgage brokers should also be able to supply buyers with
information about programs in their area and help determine eligibility.
Read the full scope of your buyers’ options and share the
available resources for down payments—or no down
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