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Do I Need a 20% Down Payment to Buy a Home?

A common misconception that floats around is that you need a 20% down payment (80% loan-to-value) in order to buy a home. It’s completely untrue. 20% down simply allows you to avoid private mortgage insurance on a standard conventional loan. Wondering what options you have as a first-time homebuyer?

Conventional loans can be done with as little as 97% loan-to-value. With this option, your mortgage insurance may be higher than a 95% loan-to-value Conventional loan, but it is there for those that need it. There’s also the Fannie Mae 97% loan-to-value program called HomeReady for those that qualify.

Beyond the 97% loan-to-value program, there’s also the more common 95% loan-to-value home loan which will likely offer more favorable mortgage terms like a lower interest rate, lower mortgage insurance and possibly expand on your max qualification loan limit.

Another great option if you don’t want to go with a 95% loan-to-value Conventional loan is the FHA government secured loan. This loan option allows you to get a mortgage with a 96.5% loan-to-value loan.

What about closing costs?

Your closing costs, unlike a down payment, can come from other resources. It’s possible to write your real estate contract with seller concessions to help with closing costs. You can also borrow closing costs from an immediate relative with a letter of explanation that says there is no expectation of payback. Some loans also allow Loan Officers to finance some or all of the closing costs into your mortgage.

There’s plenty ways that I can assist you as your loan officer. What happens is after I get your “financial story,” if you need help with closing costs, I will have a discussion with your real estate agent to find solutions to leap that hurdle.

What if I have no money for a down payment?

There’s still homebuyer down payment assistance programs available to you. In Utah, for instance, there’s the VA 100% financing loan, the USDA Rural 100% financing loan and multiple Utah Housing down payment assistance loans available.

Besides down payment assistance programs, some other lending programs allow you to receive your down payment as a gift from immediate family members and other sources. Speak to me about these options.

To learn more about 100% financing options in Utah, please go to my 100% Utah Financing Options page for more information.

Want to discuss your options with a licensed, reputable and trusted Loan Officer? Please text 435-590-1019 to arrange a free, no-obligation mortgage consultation.