Often, potential buyers believe that a 20% downpayment is required to purchase a property. There are a variety of loans and down payment options available, allowing some buyers to purchase with 0% – 3% down.
An overview of loan types:
The VA Loan: 0% Down Payment
This loan is for Veterans only. It is a ‘thank you’ for their service that allows them to buy with no money down, and no mortgage insurance. This is a government-backed loan and is a fixed-rate 30-year loan. Bialack and Associates is a proud supporter of our veterans and has done multiple VA loans through the years. If you are a veteran, thinking of using your VA loan, we are happy to help.
FHA Loan: 3.5% Down Payment
This Loan is for buyers with credit scores under 700 and that have a lower down payment saved. This is a government-backed loan and is a fixed-rate 30-year mortgage. However, it does have its drawbacks by having a higher monthly payment that includes mortgage insurance, but it also has a relatively low-interest rate.
Low Down payment conventional: 3% – 15% Down Payment
This type of loan is great for buyers with strong credit but not enough savings to get them to the 20% down payment mark. The loan allows buyers to purchase without restrictions and offers a lower mortgage insurance rate than an FHA loan. It is a fixed-rate 30-year mortgage. This is a great loan option for 1st-time buyers.
Conventional / Conforming Loans: 20% Down Payment
This is the loan most people think of when they think they need a 20% down payment. A conforming loan is governed under federal regulations, has a lower interest rate, and will have a lower monthly payment since this loan will not require impound accounts and it will not require mortgage insurance. This will be a fixed-rate 30-year mortgage. The 2021 Los Angeles County loan limits for a 1 unit building / single-family home are $822,375.
Jumbo Loans: Changing Down Payment Amounts
This loan is for homeowners looking for purchase at an amount over the conforming loan limits. These loans can vary in down payment amounts and interest rates depending on the lender. These loans are not able to be secured by the government or sold on the secondary market. They often require high credit scores and low debt to income ratios.
Our team is well versed in assisting buyers in looking into all loan options. We pride ourselves in working with mortgage industry lenders who specialize in customizing loans to fit individual buyer needs.
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