For low down payments, buyers FHA’s not the only option. We can offer them a conventional mortgage instead. Conventional programs are fueling the low-downpayment movement. Today, one in four buyers uses a low-down payment loan to purchase their home according to real estate data website Realtytrac.
HomeReady Mortgage
The HomeReady mortgage “allows low- to moderate-income families buy a home with a three percent down payment.” This program does not require any money from those who have gift funds or have qualified for a grant. These options can cover not only the down payment in whole, but also all closing costs. Another feature of this loan is the option for families to be able to use all household income for their mortgage approval. This is due to the influx of multi-generational households and is a prime example of how loans are evolving to cater to a new generation of homebuyers.
Conventional 97
Conventional 97 also only requires a three percent down payment, but differs in requirements from HomeReady. This type of loan does not have income limits and buyers are not required to receive buying education prior to purchasing their home. This program allows for small payments to be made by those who do not need the same level of flexibility those who use the HomeReady program need. A buyer’s eligibility will be determined by a lender who evaluates the borrower’s income, living arrangement, and proposed property location.
Home Possible Advantage
This program offers a three percent down payment as well, but also provides reduced mortgage insurance for borrowers. This allows for more saving opportunities than borrowers who use one of the other two programs will receive. The Mortgage Reports states that “the savings can translate into an approval for borrowers right at the 43% debt-to-income limit.” A major, positive difference can be made for the borrower depending upon which loan program works best for them and their lifestyle once assessed by a lender.
Get in touch with a professional loan consultant before making any decision about what type of loan program to enroll in. A lender will be able to provide you with professional guidance to help you find the right program for you.