The Myth of 20% Down Payments

So when you are looking to buy a home, how much do you think you need for a down payment? 5%? 10%? What about 20%?

I get people saying to me all the time, “I can’t buy because I don’t have 20% down.” But its not true!

I want to find the news reporters who keep this myth alive, dress them in Lady Gaga’s meat dress and introduce them to a pack of coyotes.

The reality is that with a high enough credit score, you could qualify for a loan where you only need to pay 3% down!

How amazing is that? A new home with only 3% down!

But what about all this talk of 20% down to qualify?

It’s all nonsense. Period. End of story. Jeannie Bolger, Senior Loan Officer with Nova Home Loans, believes the 20% down payment myth stems from misinformation and everyone wanting to give advice without actually doing the research.

(By the way. I love Jeannie. She is great. She gets people qualified and works hard throughout the process.)

So how can you qualify for the 3% loan? To begin, the loan is backed by FannieMae/Freddie Mac (aka, the guv’mt). According to Bolger, to qualify you need at least a 680 credit score. Keep in mind this is only a minimum and is not a guarantee.

Having a lower credit score doesn’t hinder you, in fact, if you have a credit score of 640 you could qualify for a loan with paying 3.5% down!

Don’t get me wrong, paying more as a down payment is great if you can afford it because it can save you money on interest rates. Plus, paying 20% down allows the home buyer to waive the mortgage insurance premiums.

This is an amazing opportunity for people to take advantage of and should not be passed up. With interest rates near (or under) 5% and homes at their rock-bottom prices, now is the best time in over 40 years to buy a home.

So snap up those short sales or foreclosures with an incredibly low down payment and give me a call today to help you find the perfect home!