Down payment on a house: 4 tips for Millennials
Conventional wisdom says a 20% down payment is necessary to comfortably purchase a house, but that’s not always the case. You can still ace the homebuying process without putting 20% down. These four tips could help you achieve down payment delight and get you one step closer toward your dream home.
1. Do your research
It’s crucial to be informed before you start looking for a home. Start the process by calculating how much you can afford for a monthly payment. Include your salary, taxes, potential living expenses and insurance into the equation to get a precise estimate. Once you’ve done this, you can make an informed decision as soon as you find the home of your dreams.
2. Don’t break the bank
It’s good to cast a wide net at first. But once you discover approximately how much home you can afford, it’s important to refine your search to properties within your price range. It’ll make the home search much easier if you focus on properties that fit your financial needs.
3. Work with a knowledgeable loan officer
Have a trustworthy ally by your side when you embark on the homebuying process. An expert loan officer is not just an industry expert who gives you knowledge and insight, but is also an advocate who will support, guide and encourage you every step of the way.
4. Take advantage of low down payment assistance options
Guaranteed Rate’s down payment assistance programs can make buying your dream home a reality. These programs allow you to put less than the conventional 20% down on your new home:
- HomeReady1 & HomePossible: Offering low 3% down payment options, these programs help borrowers with low-to-moderate incomes, as well as borrowers in high-cost or under-served communities.2 Income limits apply.
- Fannie Mae 97% & Freddie Mac HomeOne: These programs, backed by Fannie Mae and Freddie Mac for first-time and repeat homebuyers, offer minimum down payment options of only 3% and no income restrictions.3 One borrower has to be a first-time homebuyer for both of these programs, and no income limits.
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1 Qualifications: Qualifying borrowers must make less than 80% of area median income in their county; min 620 FICO score; homeownership counseling required for first-time homebuyers. min 620 FICO score; at least one borrower on each purchase transaction must complete Framework® online education course.
2 Credit and loan limit restrictions do apply.
3 Applicant cannot own any other property at time of closing. Homebuyer education/counseling may be required.
Applicant subject to credit and underwriting approval. Not all applicants will be approved for financing. Receipt of application does not represent an approval for financing or interest rate guarantee. Restrictions may apply, contact Guaranteed Rate for current rates and for more information.