Traditional and conventional home purchases may require five to 10 percent down on a home. However, the government home buyer program that is available through the Federal Housing Administration (FHA) generally requires 3.5% down to purchase a home. The down payment required by FHA can be given to you as a gift by a charitable organization, your labor union, your employer, one of your family members or by a government agency that provides monetary assistance to home buyers within a specific income range.
Buying a Home
Whether you purchase your home via a conventional mortgage loan or through the FHA program, you can apply to receive monetary assistance from agencies that have received grants to assist home buyers within a specific income range. Depending on the program that is available when you are ready to purchase a home, you may be able to receive up to $10,000 from these agencies to pay down on your home. However, you may have to participate in a homeowner's workshop to be eligible for these types of programs.
Closing Costs
Closing costs are different from a down payment and are required to be paid at the closing. To limit your costs in purchasing your home, your Realtor can request that, either, the seller or the lender pay your closing cost which usually equals to about 3% of the price of the home. In addition, if you qualify to receive funds from one of the governmental agencies that assist buyers, both your down payment and your closing cost may be covered depending on the amount that you receive. Your lender may, also, be able to combine several programs to help you to reduce the cost of purchasing your home.
Typically, there are some costs that buyers just can't avoid. These costs include purchasing homeowner's insurance, paying for an appraisal and inspection costs. However, depending on the type of loan program that you have, the assistance that you receive, and how your loan is structured; some of these costs may already be covered as well.
Mortgages and Loans
Because of so many foreclosures throughout the nation, it may be difficult to locate a 100-percent mortgage loan program. However, if this is a financing option that interests you, you should definitely inquire with several lenders to find out if a 100-percent loan program is available when you are ready to buy a home. You will still be required to pay closing cost; but, then, again, you can request for the seller to pay your closing cost.
When it comes to finding out whether there are any home buyer assistance programs available; don't limit yourself to getting the information from a lender. The lender may not be informed about every program that is available to buyers. Research the Internet, yourself, and ask questions.
If you plan to get financed through a bank, it is important to know that not all banks are the same. You should compare the home buying programs of several banks to determine which program is best for your needs.
Sources
- Down Payment Assistance. American Dream Down Payment Assistance Information Resource Guide. (accessed November 20, 2010).
- Federal Housing Administration. Local Homebuying Programs - HUD. (accessed November 20, 2010).
Claudette Pendleton - Claudette Pendleton is a freelance writer and real estate agent. She is, also, a self-taught credit restoration consultant. Since nine ...
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