If your answer is "not enough," you may be closer to buying a home than you think.
One of the most common concerns I hear from potential homebuyers is that they haven't saved enough money for a down payment. Many still believe they need 10% or even 20% down before they can purchase a home.
That simply isn't true for many buyers.
Depending on your qualifications, the type of property you are purchasing, and where you plan to live, there may be financing options that require little or even no down payment from your own funds.
Before you spend another year trying to reach a savings number that you think you need, let's look at some of the options that may already be available to you.
Can You Buy a Home With 100% Financing?
Yes. Qualified homebuyers may have access to mortgage programs that provide 100% financing.
There are several ways this may be possible.
VA Home Loans
If you are an eligible Veteran, active-duty service member, or other qualified borrower, a VA home loan may provide 100% financing with no required down payment.
VA financing can be an excellent homebuying benefit for those who are eligible. If you have VA eligibility, I recommend reviewing this option before assuming you need to save for a traditional down payment.
USDA Home Loans
USDA financing may also provide 100% financing for qualified borrowers purchasing eligible properties.
USDA loans have both borrower and property eligibility requirements. This can make the program particularly worth exploring for buyers considering homes outside some of Arizona's larger metropolitan areas, including certain communities in Pinal County and the Show Low and White Mountains area.
100% FHA Financing Option
There is another option that many Arizona homebuyers may not know exists.
Altitude Home Loans offers a 100% financing option in conjunction with an FHA home loan for qualified borrowers. The program can provide assistance toward the FHA minimum required investment, which may allow an eligible buyer to purchase without providing the traditional down payment from their own funds.
There is no income restriction for this program.
Qualification and program requirements apply. While 100% financing may eliminate the need for a traditional down payment, buyers should still plan for other homebuying expenses, such as closing costs, prepaid expenses, inspections, and other costs associated with the transaction. The good news is that this program also allows the seller to contribute toward eligible closing costs through seller-paid concessions of up to 6% of the purchase price.
Buying a home is about more than finding a loan program. It is about creating the right financing strategy for your situation. Understanding how down payment options, seller concessions, and available assistance can work together may help you make a more informed and confident homebuying decision.
What About Down Payment Assistance Programs?
Arizona offers several down payment assistance programs that may help qualified homebuyers with some of the upfront costs of purchasing a home.
Some programs are available statewide, while others are funded through local housing authorities or Industrial Development Authorities, commonly referred to as IDAs, and may only be available in certain counties or communities.
Each program has its own guidelines, interest rates, fees, eligibility requirements, and method of providing assistance. Because guidelines and program availability can change, it is important to review the options that are currently available when you are preparing to purchase a home.
What Arizona Down Payment Assistance Programs Are Available?
Home Plus
Home Plus is an ongoing statewide Arizona down payment assistance program. Because it is available statewide, qualified buyers may be able to explore Home Plus when purchasing throughout Arizona, including Maricopa County, Pinal County, Show Low, the White Mountains, and other Arizona communities.
Other Arizona Homebuyer Assistance Programs
Depending on where you plan to purchase, additional programs may also be available. These can include programs such as Home in Five and Arizona Is Home, along with other assistance programs funded through local housing authorities and IDAs.
Eligibility may depend on factors such as the buyer's qualifications, property location, loan program, and income. Program guidelines, funding, and availability can change over time.
If you are interested in down payment assistance, contact me for the current programs, guidelines, and availability in the area where you want to purchase. I can also help you compare those programs with your other financing options so you can determine which strategy makes the most sense for you.
Do You Have To Be a First-Time Homebuyer To Get Help?
Not necessarily. This is another common misconception about down payment assistance.
Some assistance programs are designed specifically for first-time homebuyers, while others may be available to qualified buyers who have owned a home before.
Even the definition of a "first-time homebuyer" may surprise you. Depending on the program, someone who previously owned a home but has not owned a primary residence within the last three years may potentially meet the program's definition of a first-time homebuyer.
Rather than assuming you won't qualify because you've owned a home before, let me check the current guidelines and available programs for you.
Can You Buy a Home With a Small Down Payment Without Using Assistance?
Yes. Down payment assistance isn't the only way to purchase with less money down.
Depending on your qualifications, traditional mortgage programs may offer relatively low down payment requirements.
- Conventional financing: Qualified borrowers may have options with a relatively small down payment. For eligible first-time homebuyers, that can be as little as 3% of the purchase price.
- FHA financing: FHA loans require a minimum down payment of 3.5% for qualified borrowers. Making a larger down payment may reduce the amount of monthly Mortgage Insurance Premium (MIP). With a down payment of at least 10%, FHA mortgage insurance may be removed after 11 years under current FHA guidelines.
- VA financing: Eligible Veterans and other qualified borrowers may qualify for 100% financing. Certain Veterans who receive VA disability compensation may also be exempt from the VA Funding Fee. For borrowers who are required to pay a Funding Fee, making a down payment of 5%-10% or more may reduce the Funding Fee.
- USDA financing: Qualified borrowers purchasing an eligible property may qualify for 100% financing. USDA financing has both property-location and household-income requirements. When determining income eligibility, USDA generally considers the income of adult household members, even if they are not borrowers on the mortgage.
Sometimes using your own smaller down payment may make more sense than using an assistance program. The goal isn't simply to find the program requiring the least amount of money upfront. It is to understand the overall financing strategy and choose the option that makes sense for you.
Education and planning are the keys to a successful home purchase. Understanding your buying plan, knowing your numbers, and preparing in advance can make the entire process easier. Through my Buyer Ready Service™, you can understand how you plan to finance your new home before you begin seriously shopping, allowing you to move forward with greater confidence.
Can Someone Give You Money for Your Down Payment?
Gift funds may be another option for qualified homebuyers.
Depending on the mortgage program, an eligible family member or other acceptable donor may be permitted to provide gift funds that can be used toward allowable homebuying expenses.
There are specific requirements for documenting gift funds, so please speak with your loan officer before transferring money between accounts. Proper documentation can make the mortgage process much easier.
Can a Seller Help With Your Closing Costs?
Yes. Depending on the mortgage program and the terms negotiated in the purchase contract, a seller may be permitted to contribute toward certain allowable closing costs.
This can be particularly valuable when a buyer has enough money for the required down payment but wants to preserve some of their savings for moving expenses, repairs, furnishings, or an emergency fund after closing.
A seller contribution is negotiated as part of the real estate transaction and is subject to mortgage program guidelines. Your real estate agent and loan officer can help you understand how this strategy may fit into your purchase.
Should You Wait Until You Have a Large Down Payment Saved?
Not necessarily.
There can certainly be advantages to making a larger down payment. But waiting simply because you believe that you must have 10% or 20% saved could mean postponing homeownership when another responsible financing option may already be available.
Home prices can also change while you are saving. If your goal is to reach a specific down payment percentage, the amount you need may change along with the price of the homes you are considering.
The better first step is to find out where you stand, understand your options, review the numbers, and then create your buying strategy.
Start by asking yourself a few important questions: How much can you comfortably afford each month? How much money do you currently have available? Do you qualify for 100% financing? Is down payment assistance available to you? Would a smaller traditional down payment make more sense? Could gift funds or seller concessions become part of your strategy?
These are the questions that education and proper planning can help answer.
And those are the questions you should answer before deciding whether you are ready to buy.
Find Out What You May Qualify for Before You Keep Saving
You don't need to figure this out on your own.
Through my Buyer Ready Service™, we can review your income, credit, monthly obligations, available funds, desired payment, and homeownership goals before you begin seriously shopping for a home.
Whether you are considering Scottsdale, Phoenix, the East Valley, Pinal County, Show Low, the White Mountains, or another Arizona community, we can also look at the financing and assistance programs currently available for the area where you want to purchase.
Don't assume the amount you have saved determines whether you can buy a home. Let's first find out what options are available to you and create a homebuying strategy that makes sense for your financial situation and goals.
Have questions about buying a home with little or no money down? Call me at 480-290-4277.
.jpeg) |
Karen Jones | Senior Mortgage Loan OfficerCertified Mortgage Loan Advisor | RCS-D | NMLS #307015 Karen Jones is located in Scottsdale and has been serving Arizona with their home lending needs for over 40 years. As a Certified Mortgage Loan Advisor, Karen is dedicated to ensuring that her clients are well educated and prepared for their new home loan decision. Altitude Home Loans Cell: 480-290-4277 |
Educational Information: This article is provided for general educational and informational purposes only and is not a commitment to lend or a determination of mortgage eligibility. Mortgage programs, down payment assistance programs, eligibility requirements, and funding availability are subject to change. Not all borrowers will qualify. A complete review of the borrower's individual circumstances is required to determine eligibility and available financing options.
The information contained, and the opinions expressed, in this article are not intended to be construed as investment advice. Karen Jones does not guarantee or warrant the accuracy or completeness of the information or opinions contained herein. Nothing herein should be construed as investment advice. You should always conduct your own research and due diligence and obtain professional advice before making any investment decision. Karen Jones will not be liable for any loss or damage caused by your reliance on the information or opinions contained herein.
The views, articles, postings and other information listed on this website are personal and do not necessarily represent the opinion or the position of Altitude Financial Corporation DBA Altitude Home Loans.
Altitude Home Loans is an Equal Housing Lender. Altitude Home Loans is not affiliated with any government agencies. This information is not from HUD or FHA and was not approved by the Department or Government Agency. This is not an offer to enter into an agreement. Information, rates, and programs are subject to change without prior notice. All products are subject to credit approval. Other restrictions and limitations may apply.
Altitude Home Loans | Corporate Address: 4031 E Sunrise Dr, Tucson, AZ 85718 | NMLS #1955555 | AZ BK #1007669 | Branch NMLS #2488403