Buying a house is part of the American dream. But for most, the biggest roadblock to that dream is coming up with a down payment. Many lenders require five percent down. If you can put that together, you’ll have a much easier time getting approved.
The problem is, that kind of money is hard to come by for first-time buyers. The average price for a house in Boone County is $152,500 according to Zillow. Buyers would need $7,625 for the average Boone County household. And that doesn’t even include added homebuying expenses like closing costs and pre-paid items such as taxes and insurance.
Saving that much can take years. And for renters facing rising rent, health costs and more, it can be hard to save anything at all.
The good news is, there are several programs designed to help you become a homeowner with as little as 3 percent down. The Federal Housing Administration, for example, helps homebuyers, especially first-time buyers, get approved. Fannie Mae and Freddie Mac, government-sponsored companies that drive the residential mortgage credit market, also offer low down payments. And if you’re an active or retired service member, or live in a rural area, you may have access to zero down payment programs through the Department of Veterans Affairs or the United States Department of Agriculture Rural Development Program.
Sounds like an easy decision, right? Sure, but don’t skip the fine print. A lower down payment makes you a bigger risk in the eyes of some lenders. So you’ll have to pay private mortgage insurance (PMI) and you’ll likely pay a higher interest rate for the life of the loan, in addition to other fees.
Shop around and find an experienced mortgage lender that can provide good advice on your down payment options. Lenders are required to disclose all fees so you can compare easily. Plus, the more you explore your options, the more you’ll learn about the process.