As a Newnan mortgage lender, I help a lot of homebuyers who don't have the 20% down payment for a mortgage. Many people struggle to come up with such a large sum of money and many believe that you can't get a home unless you have that 20%. This isn't the case, however, and there are options for buying a home with a minimum down payment. 

There are some things to keep in mind when you make a low down payment on a home. For a start, your monthly mortgage repayments will be a bit higher. You also need to show that your monthly debts are manageable and that your income can cover the cost of a higher mortgage payment. 

Specialized Newnan Mortgage Programs

FHA Loans

Back in 1934, the FHA (Federal Housing Administration) was created to encourage new homebuyers into the market. They offered qualifying requirements that were reduced to help those first-time buyers get a home. FHA loans let you make a lower down payment and more flexible requirements than a traditional loan does. It's insured by the FHA and you need a credit score of at least 500 to qualify for the option of making a 10% down payment. Those with credit scores that are 580 and up can get a 3.5% down payment options.

USDA Home Loans

The U.S. Department of Agriculture created a housing program that helps families with low to moderate streams of income. It's called a Rural Development Lona and it doesn't require a down payment. They tend to have a mortgage insurance premium that is lower than what you would need for an FHA loan. The payments for your insurance are calculated into your monthly repayments.

This tends to be an overlooked option by many, mainly because people equate rural with underdeveloped areas. However, many of the homes available on this scheme are just outside of major cities.

VA Loans 

This mortgage loan option is geared towards veterans, those still serving in the military, and their spouses. It offers 100% financing so that you don't need to make a down payment. You won't need mortgage insurance with this type of loan either. However, you do get charged with a one-time 2.15% VA funding fee, which is put back into the program to keep it running. The fee is generally calculated into your loan. To qualify, your credit score needs to be at least 620, but there are some options to help those with a lower credit score.

Other Funding Sources

Many new homebuyers will use gift funds to put towards a down payment. These are funds that are not a loan that you have to pay back to the person gifting it. Other funding options to think about are:

• Pulling funds from 401K, bonds, stocks, or IRA
• Selling things like a car, motorcycle, or boat you may own.
• Using your refunded security deposit if you are currently renting.
• Using funds from your tax return refund

So, it is possible to buy a home with less than the 20% down payment. If you want to see if you qualify for any special loan programs, give our Newnan mortgage lender team a call today!