A 20-percent down payment on a house is a lot of money, no question about it. Do you know how long it takes for an average American to save for a 20% down payment?
The 2019 Home Affordability Report from co-investment firm Unison found that nationwide, a median income earner buying a median priced home would have to save for 14 years to have a 20% down payment.
Fourteen years is a long time. And this study applies to buyers with a median income buying a median priced home. What if you want to purchase a larger home in a prime zip code? In that case you might be ready for retirement before you have saved enough for a 20% down payment.
The good news is you don’t have to save 20% for a down payment anymore. But Unfortunately, the “20% down payment myth” is still widely circulated among buyers. The truth is, there are several loan products that only require 3% or even 100% financing. There are also Michigan down payment assistance programs available that will keep more money in your pocket. Let’s go over a few of these options.
Conventioanl Loans
The “20% down payment myth” likely originated from conventional loans. Although it is true that a down payment less than 20% will require a monthly PMI payment, that 20% is not requirement. First time buyers are only required to put 3% down and repeat buyers are required 5%.
Learn More: Michigan Conventional Loans
FHA Loans
FHA loans are insured by the Federal Housing Administration and only require a 3.5 % down payment. Another benefit of FHA loans is they only require a credit score of 580. This would be perfect for someone who wants to apply for the conventional loan with a 3% down payment but their credit needs a bit of repairing.
Learn More: Michigan FHA Loans: Loan Limits, Eligibility and Other Common Questions
USDA Loans / RD Loans
How does a zero down payment sound? Pretty good? USDA loans, also referred to as RD loans or Rural Development loans are unique due to the fact that only certain zip codes will qualify. These zip codes, of course are in rural areas. But for buyers who actually prefer rural areas and love the feel of country living, this loan is the perfect solution.
Learn More: USDA Loan Requirements
MSHDA Loans
MSHDA Loans offer $7,500.00 in down payment assistance and the buyer only needs to contribute 1% of the sale price! Borrowers will need to take a home buyer eduction course in order to qualify and will need a minimum credit score of 640.
Learn More: MSHDA Loan Requirements
VA Loans
The US government created The Veterans Administration Home Loan Guaranty Program in order to assist veterans in purchasing a home. VA loans will require no money down and may be flexible with credit scores and higher debt to income rations are accepted.
Learn More: Michigan VA Loans
Get More Info on Michigan Down Payment Assistance and Other Loan Products
Julie Krumholz has over 30 years of the mortgage industry and specializes in Michigan down payment assistance and other loan products that require a minimal down payment. Call today at: 586-382-5482 and let Julie help you navigate through the loan process and answer any questions you may have.
Learn More: Michigan Down Payment Assistance Programs
