There are many things that might prevent someone from buying a home. It could be that they aren’t ready to own a home, don’t know where they want to live – the list goes on. One thing that shouldn’t hold them back though are misconceptions. Let’s clear some of those up right now.
“I need 20% down to buy a home”
No you don’t. There are PLENTY of options that let home buyers put down less than 20% while buying a new home. In fact, almost 60% of home buyers put down less than 6%. Here are some alternatives to putting down 20%:
- FHA (Federal Housing Association) Loans allow you to get a loan with less than 3.5% down (if you qualify)
- Some local and state agencies sponsor down-payment assistance programs. Follow the links to find any near you:
- These three government-related lenders can get you going with as little as 0% down:
- VA: For veterans and family members
- USADA: For buyers in qualifying locations
- Navy Federal Credit Union: For military, family members and some government employees
“My credit score it too low”
A less than perfect credit score doesn’t mean you can’t afford a home. You can qualify for an FHA loan with a score of only 500. However, in most cases a lower credit score will mean you’ll have to put down a higher down payment. An alternative is to have a co-signer who has better credit – but remember, if you don’t make the payments, the cosigner will be financially responsible which will impact their credit.
“I can’t afford the commission for the agent”
This is also something you don’t need to worry about. Typically, commissions are paid from proceeds of the sale via the seller.
“I definitely have the loan – I was pre approved”
Not exactly. Pre approval just means that all things remaining equal you’ll get the loan. However, if you purchase a big-ticket item between the pre approval and closing or your credit score suffers for any reason, you may not remain eligible for a loan. So, hold off on making purchases for that new home or buying that new car.