REGION – The biggest surprise for many homebuyers isn’t the monthly mortgage payment, it’s the amount of cash they think they need up front. The good news? That may not always be the case. With the Federal Reserve’s September rate cut potentially leading to lower mortgage rates, now could be a good time to explore mortgage programs that offer low or even zero down payments.
Saving up 20% down can take years, but today’s loan programs are designed to help you get into a home with less cash up front. By reducing or eliminating the down payment requirement, you may be able to move into a home sooner, and still take advantage of the lower rates we’re seeing after the Fed’s decision. That could mean more flexibility for your budget, and more opportunities to begin building equity once you own your home.
Several types of mortgage are designed to make homebuying more accessible, explained below.
FHA Loans – Low-down-payment options with flexible credit and income guidelines.
VA Loans – For eligible service members and spouses, these loans may require no down payment and no private mortgage insurance. Instead, there is an up-front funding fee that takes the place of mortgage insurance.
Conventional 97 & HomeReady – Fannie Mae and Freddie Mac programs that allow a low down payment, with added flexibility for multigenerational households.
Why now could be the right time to look
The Fed’s September rate cut is a signal that borrowing costs may shift. Pairing that with a low- or no-down-payment option could make it easier to buy with less cash up front, and may provide more manageable monthly payments depending on your situation.
Written by Victoria Blodgett, Prime Lending, Ludlow, Vt.