FIRST-TIME HOME BUYER
Low-down payment conventional loans
Conventional mortgages are among the most popular types of loans: They don’t have specialized eligibility requirements, come with low minimum down payments and are available through a variety of reputable lenders, both traditional and online. Fannie Mae and Freddie Mac set borrowing guidelines for conventional loan programs. With a 3 percent minimum down payment, these programs are an affordable option for borrowers with a solid credit score and income:
Conventional 97 mortgage
Fannie Mae and Freddie Mac both back the Conventional 97 program, which only requires 3 percent down, but a minimum credit score of 620. Like most conventional low-down payment mortgage programs, the borrower is also required to pay for private mortgage insurance (PMI), an additional cost with their monthly mortgage payment.
HomeReady mortgage-Home Possible
Fannie Mae’s HomeReady mortgage program also requires just 3 percent down (with PMI, although it might be less expensive), and offers more flexible underwriting. Home Possible mortgage – Freddie Mac’s Home Possible mortgage program is similar to the HomeReady mortgage, with a 3 percent minimum down payment. HomeOne mortgage – This Freddie Mac mortgage also allows for just 3 percent down with PMI, but is available only to first-time homebuyers and comes with some special criteria. You don’t directly deal with Fannie Mae or Freddie Mac to get these loans. Rather, they’re available through many types of mortgage lenders, including banks, online lenders and credit unions. Lower rates to qualified borrowers.
Government-sponsored first-time homebuyer loans
Insured by the Federal Housing Administration, FHA loans allow borrowers to buy a home with a minimum credit score of 580 and as little as 3.5 percent down, or a credit score as low as 500 with at least 10 percent down. If you put down less than 20 percent, however, you’ll have to pay FHA mortgage insurance, which includes a 1.75 percent upfront fee and annual premiums. FHA also insures FHA 203(k) loans, which allow borrowers to buy and fix up a home with the same low credit and down payment flexibilities.Traditionaly lower rates than conventional with new lower mortgage insurance payments.
The U.S. Department of Agriculture (USDA) guarantees loans for some rural homes for up to 100-percent financing (in other words, there’s no down-payment requirement). This doesn’t mean you have to buy a farm or shack up with livestock, but you do have to buy a home in a USDA-eligible area. There are also fees for this type of loan.
Qualified U.S. military members (active duty, veterans and eligible family members) can apply for loans backed by the U.S. Department of Veterans Affairs (VA). VA loans come with lower interest rates compared to other loan types, and don’t require a down payment. Borrowers, however, will need to pay a funding fee, but it can be rolled into your monthly loan costs. Some servicemembers might be exempt from paying this fee, as well.
Conventional 1% down
We will contribute an additional 2%, giving the borrower a total of 3% for their down payment. Our 2% contributions is capped at $4,000 — which will give the borrower a total of 3% for the down payment , however can be adjusted for a slightly higher borrower contribution. Qualified borrowers need to be at 80% of the area median income.