Myth #1: I need a 20% down payment to buy a home.
For the last three years, first-time homebuyers’ median down payment was just 6%. In 2015, repeat homebuyers’ average down payment was 14%. That’s thanks to programs such as conventional mortgages requiring less than 20% down; FHA loans requiring a minimum 3.5% down; plus USDA mortgages for rural areas and VA mortgages for active military and veterans requiring 0% down.
With less than 20% down, you do have to buy mortgage insurance. You pay less up front, but a little more each month for an insurance premium. This ends once you’ve paid down your mortgage balance to 80% of the value of your home—except with FHA loans, which you have to refinance to eliminate the insurance. Premiums were tax deductible for 2016, but Congress must reauthorize the deduction every year.*
Myth #2: I need great credit to qualify for a mortgage.
Even with a lower FICO credit score or a higher level of debt, such as a student loan, people can still qualify for a mortgage. FHA loans accept lower FICO scores than conventional mortgages, and all lenders weigh everything on your application together—credit score, debt level, bank reserves, and down payment.
For complete details about financing a home purchase or improvement, or refinancing at lower rates, please text, email or call one of our Real Estate Agents any time. Art DelNegro, Lisa Marie Vargas or Wendy Bryant can be reached at 210-593-9807 or contact us here.
P.S.: Mortgage rates remain attractive, but it’s smart to start the process early, so please contact a Pyramis Real Estate agent to explore today’s excellent options.
* As with all tax matters, always consult with a tax professional before making any decisions.