How To Buy A Home With A Low Down Payment

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    How To Buy A Home With A Low Down Payment

    Purchasing a home with a low down payment is important for a number of reasons, including the buyer’s ability to have extra cash left over for closing costs, decorating expenses, upgrades and/or other essentials needed to turn their new house into a home.  Thanks to the level of competition between mortgage lenders, it’s now easier than ever to buy a home with a low down payment.

    First-Time Homebuyers

    There are a lot of perks to being a first-time homebuyer, including the ability to get in the door with a low down payment.  Many lenders will ask for a down payment as low as five percent (three percent for FHA loans) to those looking to purchase their first home.

    A first-time homebuyer is someone who has rented their previous home(s) or has never purchased a house on a permanent foundation.  Individuals who have owned manufactured homes may also be eligible for a first-time homebuyer loan, but the final decision is up to each individual lender.

    FHA Loan

    This type of loan is guaranteed by the Federal Housing Authority (FHA) and allows for a smaller down payment than many conventional loans.  In addition to offering down payments as low as three percent of the total purchase price, FHA loans often carry lower interest rates and are easier to qualify for.  This type of loan is ideal for first-time homebuyers, individuals with past credit problems or even those who wish to purchase a second home.

    Provide Your Land As Collateral

    If you own the land that you intend to build on, many lenders will use the land in place of a down payment.  In other words, you build a house on the land that you already own, and the lender gets both if you default.  This is why individuals who own land often choose to build, while using the lot in place of a big down payment.  In addition, many lenders are more willing to approve a loan if the land is already owned by the buyer.

    Owner Financing

    When a seller lists their home, they have the option of considering owner financing.  In this situation, a buyer provides a down payment to the seller and signs an agreement to pay for the home (plus interest) over a preset number of years.  Owner financing typically requires a lower down payment, which can be any amount that the buyer and seller agree to.  Because there is no bank qualifying and no credit check, a seller can extend the offer on any terms that they wish.

    About Us
    The Adam Merrick Team is dedicated to putting our experience and local knowledge to work for you in all steps of your real estate transaction, from start to finish. We are one of the most respected teams for buying and selling in Peoria area. Whether you are buying or selling a home in Peoria itself, or one of its convenient suburbs such as BartonvilleBrimfieldChillicotheDunlapEurekaEast Peoria, Elmwood,FarmingtonGermantown HillsHanna CityMackinawMapletonMetamoraMortonPekinPeoria Heights orWashington.

    We are the number 26th team in the country ranked by The Wall Street Journal. We are the number 1 team in Peoria. We know the areas very well and can direct you to right neighborhoods for the lifestyle want and budget you need.

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