Are you tired of renting but think home ownership is out of reach?
Carl Carlson, CEO of Carlson Financial, presents different loan options that might allow for you to get into a place of your own a little quicker.
The most common type of loan is a conventional loan, which requires a minimum of 5% down. On a $200,000 home, a 5% down payment is still $10,000, so it’s understandable why that can seem like a big hurdle.
There are a few types of “special” loans that actually require very low, or even NO down payment at all, and these should be the first programs you look into when trying to figure out your options, Carlson said.
A few examples are VA loans, which are available to past or present service members and USDA loans which may be available to borrowers in rural areas.
Additionally, many states or cities may have their own loan programs to make homeownership more affordable. These local programs are commonly available to teachers, law enforcement, firefighters and health care workers.
Those special loan options are available to people with specific jobs or who live in specific areas, but if you're not not eligible for any of those Carlson says to look for loans that might require the lowest down payment.
Another option might be an FHA loan. An FHA loan allows for a down payment as low as 3.5%, which can be from borrowed or gifted money (not typically permitted with a conventional loan).
Eligibility for an FHA loan is based the home being your primary residence, having a 3.5% down payment and 580 credit score or better, making them much easier to qualify for.