Affordable Housing Options

January 7, 2021 by DRG

Is 2021 the year that you buy your first home? Are you nervous that you won’t have enough money to put down? Are you afraid you missed out on the lowest interest rates ever? While 2020 presented flexible financing options as well as low rates, the good news is that most industry experts forecast this will continue!

Whether it’s through a friend, coworker, or the news you have probably heard something about low interest rates. In 2020 we saw mortgage rates hit the lowest point that they have ever been which made monthly mortgage payments more affordable. Many first-time homebuyers were able to find interest rates at 3% or less and current projections by Fannie Mae and Freddie Mac are forecasting rates to be at or below 3% for much of 2021.

Along with the low rates many financing options offer minimum down payment requirements as well as flexibility if you have had a few bumps in the road on your credit report. Let’s talk about the most common financing options.

Conventional Financing
This is a very common option for many first-time homebuyers that only requires 3% down. If you don’t have the down payment conventional loans allow down payment gifts from relatives and down payment assistance program contributions to name a couple of options. Bumps in your credit are ok and the minimum score needed is a 620 Credit Score.

FHA Financing
This is an option that is insured by the government. You only need to have 3.5% down and just like conventional financing they allow gifts from relatives and down payment assistance programs for the down payment. FHA has even more credit flexibility than a conventional loan and most lenders will only require a 580 Credit Score.

VA Financing
If you have been in the military or are currently in the military you may be eligible for a VA loan. VA loans are one of the best options available and allows veterans to finance with zero down. In addition, they don’t require any mortgage insurance. VA doesn’t have a specific credit score requirement, but many lenders want to see a 580 or better.

Down Payment Assistance
These programs can be neighborhood specific, county specific, or on the state level. The most popular option offers up to $17,000 in down payment assistance and only requires $1,000 down from the buyer. Most down payment assistance credit score requirements vary but most have income restrictions as to how much someone can make. In some cases, the down payment assistance has to be paid back monthly or when you sell the home.

Not sure which option is right for you? that’s ok because most people don’t know! Buying a home is different for everyone and the options need to be based on you and your short term and long-term goals. JJ is a mortgage expert that will help you explore and understand today’s options to help determine what is best for you. Connect with JJ today to take your first step toward home ownership!

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