You Don't Need 20% Down to Buy Your Dream Home. The Mortgage Rules Have Changed but Not the Downpayment Requirements!

It seems like so long ago, but in actuality, it’s only been about eight years since the housing crisis began … In response, there has been a needed tightening of Mortgage Underwriting Standards to fix some of the previous abuses. Now in place are new safety guards and regulations which protect and help borrowers.

The new standards are a needed improvement that have brought many changes in the information given to borrowers and to guarantee that they are making informed decisions. However, it should be noted that the one thing in financing left largely unchanged throughout and after the crisis is: DOWNPAYMENT.

Have you been hearing that you need a full 20% down in order to buy a home? If you have, you have been hearing the wrong information! The actual percentages surrounding Down Payment requirements for financing/borrowing have remained vastly unchanged even though the processes related to mortgages have changed significantly.

The same loans that were available before the housing crisis are still available.

That means that the following are still available:

• 3.5% Down Payment FHA loans
• 0% Down Payment VA loans (Qualified Veterans)
• 3% Down Payment Conventional loans
• 0% Down Payment USDA loans (Eligible Applicants – Eligible Locations)
• Many States/local municipalities have Grants or resources available for Borrowers in need of Down Payment Funds

So what is the single most important FACT hopeful Home Buyers need to know about current Down Payment requirements? It’s simple …

You DON’T need 20% Down!

What's also a fact:

• A new Home Buyer/Borrower may be required to hold Private Mortgage Insurance if putting less than 20% down
• That Private Mortgage Insurance does NOT keep them from buying. (The obtaining of Mortgage Insurance is almost a foregone conclusion for qualified Buyers)
• Private Mortgage Insurance is mandatory on FHA Government-Insured Loans

But it’s also true that: Down Payment Funds can come from many allowed sources.

Those sources include:

• Gifts from relatives
• Loans from Retirement Funds
• Life Insurance Policies with Cash Value
• Stocks
• Bonds
• Inheritance
• Traditional Sources of Savings, Checking, Mutual Funds, Money Market Accounts
• Documentable Bonuses from Employers

Are you a hopeful Home Buyer or potential Borrower?

If you’re hearing from someone or reading somewhere that you’re required to have a 20% Down Payment to buy or finance a home? Keep moving. That’s not true. Options and requirements needed for a lower Down Payment may exist elsewhere.

Don’t give up! Seek additional advice regarding your needed Down Payment. Exhaust all your options and information resources.

Try talking with another lender. Get a second opinion. Because it’s also a FACT that financing options can vary between Lenders. Mortgage Programs, Mortgage Program availability, options, requirements can also change and evolve.

And if you still receive a negative answer? Don’t get discouraged. Any setback may be just that, a setback. And only temporary, for all the reasons mentioned above. In that case, you need to talk to a good lender who can help you create a plan to overcome that temporary setback so that in a year or two, you will be moving into your new home! Don't give up on your dream. With the right lender and the right Realtor, you can make that dream come true!

If you are looking for a home in the DC metro area, you know there is more to the process than just picking a property and making an offer. You need to find the best location for your wants and needs, get a great price, and work with a lender who will make your life easier - not harder. Trust your search with a Realtor who is licensed in DC, MD and VA and really knows the city and all its secret neighborhoods.
Start your search with the Lise Howe Group, Washington Natives who love the city and all its quirkiness! If you are moving or relocating to Washington DC, be sure to ask for our relocation guide. Call us at 240-401-5577 to schedule an appointment or email us at lise@lisehowe.com. Too excited to wait to talk to us about a great home? Just click here to start that home search.