Lenders expect homebuyers to have enough money available to make the down payment - usually up to 20 percent of the asking price for the house and to pay closing costs (3 percent to 6 percent of the loan amount). You may consider the following sources for a down payment: savings, stocks and bonds, mutual funds, employee savings plans, Individual Retirement Accounts, etc. Some mortgage programs allow to use a gift of money from parents or relatives that need not be repaid or grants from a nonprofit housing assistance organizations for a part of your down payment.
If you don’t have enough money for downpayment that most lenders require, you may obtain Private Mortgage Insurance. It allows you to get a mortgage loan with a down payment as low as 5 percent. You can also consider an FHA or VA loan, or RHS program. Down payments on FHA loans can be as low as 3 percent, and closing costs can be wrapped into the mortgage, but FHA loans cannot exceed the statutory limit. RHS and VA loans usually require no down payment but they are only available for eligible applicants.
In recent years, Fannie Mae and Freddie Mac have also introduced low down payment programs.
Freddie Mac's Affordable Lending mortgage products include:
* Affordable Gold® 5
* Affordable Gold® 3/2
* Affordable Gold® 97
* Affordable Gold® Alt 97
* Affordable Seconds
