There is this rumor out there that you need a 20% down payment to purchase a home, but it is a lie. There are many other programs out there that allow someone to purchase a home for much less. In some cases just a few thousand dollars. To be forthright there are some restrictions, but they are usually pretty easy to surpass for most people. Here is a quick overview of some programs are out there right now for Colorado:
1. VA - This loan program allows you to purchase a home for 0% down. There is of course 1 big catch. You need to be a veteran.
2. USDA - While this loan program may confuse a few due to it's association with the Department of Agriculture, it can be a great way to pick up a home for almost nothing out of pocket. The biggest restriction for this program is location. Check if your area qualifies here.
3. CHFA - Low down payments and even down payment assistance. These loan programs are really popular in Colorado for those purchasing a first home. Costs will vary for each home buyer, but if utilized right these can be a wonderful way to get into a home.
4. HomeReady - 3% down and no PMI! PMI (Private Mortgage Insurance) is why many people think that 20% down is needed to purchase a home. PMI is an extra monthly fee on top of your mortgage payment that you have to pay. It is only applied to loans that involved less than a 20% down payment. Loans like the HomeReady get rid of the PMI and can at many times be cheaper than the better known loans like the FHA.
5. FHA - The most well known low down loan. Starting at 3.5% down these loans can open up your options to all kinds of purchases. Many people like to use these to purchase a multi unit property under a single mortgage. Live in one unit and rent out the others. If played right you can live for free or even make money to live in your property.
These are just a few of the loan programs out there for small amounts of money. One thing to remember with any purchase is that there is a big difference between "qualify" and "afford". Be sure when purchasing a home that you stay within a range where the payment can easily be accomplished. Many people use these programs and get in over their heads. Foreclosure is a real thing and can have massive negative effects on your future.
Call or email us with any questions about these programs or the home buying process.