This is a GREAT question from a reader and, it gives me a great opportunity to share good news!
The short answer is no, you do not need 20% down to buy a home. Having 20% down is the ideal, the best case, but it is NOT required today.
That said, in order to get a home loan you are going to need to have a job, you are going to need to have a history of paying your bills on time and you will need some money in the bank. There is no more "fog a mirror and get a loan" programs like there used be to six years ago.
For well qualified borrowers, there are 5% and 10% down payment conventional loan programs available. These programs will require mortgage insurance and, not everyone is excited about that prospect. Still, these are fantastic programs for home buyers with plenty of income but without a large down payment nest egg.
My personal favorite low down payment program is the FHA program. This is a 3.5% down program for first time home buyers (a first time home buyer is anyone who has not owned real property for the past 3 years). The cost of originating this loan is more expensive than other loan programs, but it allows buyers to own a home for realtively little out of pocket to start. There are also lending programs that come with buyer credits to cover some of the closing costs.
I helped a fantastic couple get into a 1,300 SqFt/$540,000 single family home last summer for a total cost out of pocket of $23,000.
For folks who do not have perfect credit scores (who does now?), FHA will work with credit scores as low as 640.
If you, or anyone you care about has loan questions, feel free to give me a call. I am a ZERO B.S. sorta guy. I also enjoy talking about real estate and helping people.
No really, I promise. NO B.S.!!!
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