When you hear that you can buy a home with no money down, that’s not completely true. The amount you need to put down depends on the type of financing. A mortgage broker can provide more information, but this should help to get you started.
Even if you get a 100% loan, there are still closing costs. These costs include the loan origination fee, credit report, appraisal, deposit to establish the escrow account and a few other minor expenses. Closing costs can be paid by the seller… you just need to remember that there is no benefit to the seller for paying closing costs. An offer of $100,000 with the seller paying $3,000 in closing costs is the same to the seller as an offer of $97,000.
There are many options available for financing. Here are a few of the most common loan types.
FHA – 3.5% down payment required. This can be a gift but must be supported by a letter from the person giving the money, stating that it is a gift.
FHA 203K – 3.5% down payment required. This option allows the buyer to finance renovations that will be completed after closing.
USDA Rural Development – 0% down payment required. There are specific requirements for financing under this program, including maximum annual income and the home must be in an area approved by the program (rural areas).
Conventional – 5%, 10% or 20% down payment, depending on the program. 20% down means a mortgage insurance premium will not be added to your monthly payment.
If you need to get pre-qualified for financing, let us know and we’ll get you a list of great lenders in the Athens area. It can be a little confusing, but having a reliable mortgage broker is very helpful! Getting pre-qualified is simple and lets you know how much you can qualify to buy. After your offer is accepted, you must apply for the loan within a specific number of days to start the loan approval process.
If you have questions, email us or call Jerri at 706-296-4395.