Here’s how conventional, FHA, and VA loans make home buying possible for those just getting started.
Do you need 20% down to buy a home? The answer is absolutely not. There are plenty of programs out there that don’t require 20%; you can put down as little as 3% on a conventional loan, 3.5% on an FHA loan, and for veterans—zero percent down on a VA loan.
The USDA also offers a zero percent down payment program, though that property does have to be in a USDA-eligible area.
So, as you can see, it’s truly a misconception that you need 20% down. Also, for buyers, there is sometimes a cost to waiting. Here’s what I mean: Let’s say you have a $400,000 home—roughly the average for our area. 20% down on that would be $80,000. For some people, that might take four to five years, if not longer, to save up that amount.
In that same time frame, let’s conservatively say that home prices appreciate 3%, so our $400,000 example house is now $450,000. Now, your 20% down payment equals $90,000.
Waiting actually costs you $10,000 more in down payment; sometimes, acting sooner than later pays off.
As always, give me a call if you have questions about financing options or if you’re thinking about buying or selling a home soon. I’d be more than happy to explore your particular situation and see if we can pair you with a trusted lender whose options fit your needs.