How much money do you need to purchase a home?
Let’s take some time to talk about one of the most common misconceptions when it comes to buying real estate. It seems that people think they need to put 20% down to be able to buy a home but really, that just isn’t true. Don’t get me wrong, it’s awesome if you can afford a large down payment for your purchase, but there are many programs available to get you into a home. Some of those programs can even get you in to a home with as little as 0% down! But before we dig too far into the different types of financing, let’s talk about the first steps you need to take in order to buy a home.
The very first thing you need to do if you’re getting ready to purchase, is talk to a mortgage broker. We have relationships with some great mortgage brokers that you can find on our website by clicking the finance tab. There you’ll find a list of some excellent local mortgage brokers that we highly recommend. Once you’ve decided on your broker, they’ll help you through the process of getting pre-approved so you can start looking for homes. Once you’re pre-approved, you can find the type of financing that best fits your needs.
There are a few different types of financing out there, so let’s talk a little bit about what they are. First, there is the plain old conventional mortgage, which is the type of loan that people mistakingly believe requires 20% down. In all actuality, a conventional loan starts at 5% down and goes up from there. Next we have an FHA loan, which starts at 3% down and has some specific criteria that needs to be met in order to qualify. It’s best to talk to your mortgage broker about these requirements but, general information about FHA loans can be found online. If you’re a veteran, I highly recommend taking advantage of your V.A. loan opportunities. Furthermore, there are zero down programs like USDA loans that, just like FHA loans, have specific requirements that must be met in order to qualify. Again, it’s best to talk to your mortgage broker about how to qualify for these programs.
When it comes down to it, there are a lot of factors that come in to play when it comes to getting a mortgage. These factors include things like your credit and your debt to income ratio and are all key factors into what type of financing you can get approved for. So if you’re looking to buy a home but aren’t quite sure where to begin, or even if you’re familiar with the process, give us a call. We love helping people find a new place to call home!
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