Lenders Offering Low Down Payment Home Loans

Buying a home just got a little easier as many lenders are now offering mortgages with down payments of as low as 5 percent, according to a recent report from CNN.

Prospective home buyers on a budget can take advantage of these low down payment offerings, which comes as welcome news in a housing market featuring rising home prices and rampant demand for a low housing inventory.

Over the past several years, first-time home buyers and other prospective buyers on a tight budget and borderline credit would have to turn to the Federal Housing Administration for a government-backed home loan. These come with down payments of as low as 3.5 percent and are geared toward those who might not otherwise have the ability to finance a home. Now, lenders are stepping up and offering conventional loans with similarly attractive rates.

Historically, conventional mortgages came with down payment options of as high as 20 percent, but that trend is changing in order to accommodate an ever-growing buyer base, not all of which can rely on the FHA as an affordable financing option.

“For years, it’s been FHA or nothing,” Guy Cecala, publisher of Inside Mortgage Finance, told USA Today. “This shift is a sign that mortgage origination is loosening up.”

Private mortgage insurance is still required for this type of loan with VA loans being the exception to financing that requires PMI. Generally reserved for former and active duty service members, select Reserves and National Guard members and unremarried surviving spouses, VA loans are also backed by the federal government and if eligible, are an ideal alternative to any other type of financing.

For civilians, however, the news that private lenders are offering low down payment options for conventional loans is very welcome. If you’d like to learn more about your Dallas mortgage options, contact our team today.