Build Your Own House

Low Down Payment Mortgage

Summary: Low down payments make buying a new home affordable. Here is a low down payment home loan that is easy to get and available at low interest rates.

With low down payment home loans such as FHA mortgage loans you would only need 3.5% of the purchase price as a down payment! This down payment amount is always subject to change by the FHA.

FHA Mortgages have more flexible qualifying requirements than conventional mortgage loans. In fact, an FHA loan is the easiest type of real estate mortgage loan to qualify for.

Let's face it. Large down payments stop many, if not most potential buyers from buying a new or used home.

You might be well able to afford the house, but don't have, or want to part with a large amount of cash.

If the house below were selling for $348,500, you would need $69,700 as a down payment on a conventional mortgage loan.

With an FHA mortgage loan, you would only need $12,197 as a down payment!!

That's a big difference in "cash out of pocket.

Courtesy of HDA© Copyright by designer/architect
House Plan #592-073D-0037
A Grand Beamed Entry With Arched Window
1665 Sq. Ft., Width 45'-8", Depth 41'-8"
3 Bedrooms, 2 Full Baths

Here's how the loans would differ:

20% down, conventional mortgage: (4.25% interest, 30 years, property taxes excluded)

Down payment: $69,700

Total loan amount: $278,800

Monthly principal and interest payment: $1,372

3.5% Down, FHA loan: (4.25% interest, 30 years, property taxes excluded)

Down payment: $12,127

Total loan amount: $339,787

Monthly principal and interest payment: $1,672

Mortgage insurance: $326 (Mortgage insurance, called Private Mortgage Insurance, or PMI, is required with less than 20% down*)

Total monthly payment: $1,997

True, the lower down payment with the FHA loan results in a mortgage insurance premium of $326.

However, once the house increases in market value so that you in effect do have 20% down, you can apply to have the mortgage insurance dropped.

Since FHA loans adhere only to FHA credit qualifications, they offer options for:

* First time homebuyers (But, you don't have to be a first time homebuyer).

* Seniors.

* Homebuyers who don't have a lot of money for a down payment.

* Homebuyers can use gift money from family members as part of their down payment.

* Homebuyers who have the money but don't want to use it for a down payment (smart).

* Homebuyers who want to keep monthly payments as low as possible (who doesn't).

* Homebuyers who don't want their monthly payments going up (who does).

* Homebuyers who don't have perfect credit.

* Anyone buying or refinancing a home.

FHA loans are also assumable to buyers!

Note: If you shop for a mortgage on your own, each mortgage lender will order your credit report and regardless of what others tell you, that will drag your credit score down.

However, if you have a mortgage broker shop for you, only one credit report need be ordered!

By the way, the FHA has a group of knowledgeable counselors that make getting an FHA mortgage loan fast, easy and convenient. They offer complimentary pre-approvals so that you can shop for a home with confidence.

You would be wise to look at FHA Mortgage Loans. They are one of the best mortgage loan products available, and they always have been.

Carl Heldmann

*Read these two articles on how to get rid of PMI on a FHA loan and what mortgage insurance is. FHA rules and requirements are always subject to change.

1. How Do I Get Rid of My PMI?

2. FHA Requirements: Mortgage Insurance.