Some of the biggest myths about the home financing process are related to down payments. Here are a few misconceptions about down payments and the reality behind them:

MYTH #1: You need a 20% down payment to buy a home.

In reality, this is simply untrue. There are multiple mortgage programs that require a low down payment, and even programs requiring no money down.  Conventional loans require a 3% down payment for conforming loan amounts and 5% for high balance loan amounts, and they allow up to 3% seller contributionss1. FHA loans require a 3.5% down payment, feature conforming and high balance maximum loan amounts, and allow up to 6% seller contributions1. USDA loans require no money down for conforming loan amounts and ZIP codes, and allow up to 6% seller contributions. VA loans require no money down for loan amounts up to $1,500,000, and allow up to 4% seller contributions2.The 20% down payment is only required to avoid incurring an additional monthly payment for Private Mortgage Insurance (PMI).

MYTH #2: Low down payment options are only for first-time home buyers.

Low and no down payment loan options are available to many qualified customers, including repeat home buyers. Discuss the features of each program with your mortgage consultant.

MYTH #3: Gift funds are not allowed to be used toward a down payment.

Gift funds are, in fact, allowed for many of our mortgage programs when buying a primary residence. Gift funds are allowed for low down payment conventional and FHA programs, as well as no down
payment programs such as VA and USDA home loans.

MYTH #4: Qualifying for a down payment assistance (DAP) program is difficult.

There are a variety of DAP programs available with various features and qualifying criteria such as income, credit, and property location. Your mortgage consultant can explain the DAP programs available in your area, discuss your eligibility, and walk you through the entire process.

All products listed are for primary residence financing only. Low down payment options may not be the best option for all borrowers. Consult your mortgage consultant to review potential loan scenarios and financing options to determine the home loan that is right for you.
1. $1,149,825 maximum loan amount is available in high balance areas only. Contact your mortgage consultant for details.
2. Excludes normal discount points and borrower’s closing costs

For more information, or for help finding a mortgage consultant, contact me. Long and Foster owns Prosperity Home Loans and they have some great mortgage consultants!