Loan options for those with little savings

by Justin Weinger on November 6, 2013

Lenders typically require that potential borrowers offer 20 percent of a home’s purchase price as a down payment before they grant someone a home loan. If you are not prepared to give this much money to a lender, you can still qualify for some loans.

The Low Down Payment Loan Insured by the Federal Housing Administration

You are very likely to qualify for a low down payment loan that is insured by the Federal Housing Administration. These loans only require that you offer 3.5 percent of the purchase price as a down payment. Your closing costs will be lower than if you were to obtain a traditional loan. On top of that, it will be easier to qualify for these loans because you will not be required to have the highest credit scores.

The Low Down Payment Loan with Private Mortgage Insurance

Another type of loan available to those with little savings is the low down payment loan with private mortgage insurance. If you are going to give a down payment of at least five percent, your lender will offer you private mortgage insurance. The advantage that you will have with this option is that your monthly payments will be lower than you would pay with a loan insured through the FHA. You may also be able to cancel your private mortgage insurance earlier than you would be able to cancel FHA insurance.

The No Down Payment VA Loan

If you are or were a member of the military, you may qualify for a VA home loan. If so, you can obtain a loan that will be guaranteed by the VA without offering a down payment. Furthermore, the VA will ensure that you are not charged closing costs that will only benefit the lender.

The No Down Payment Navy Federal Loan

If you are a member of the military, a select civilian employee of the military, an employee of the State Department or a family member of these individuals, you may be able to receive a no down payment loan from the Navy Federal Credit Union. This loan is similar to the one you would obtain from the VA, but the funding fee you will be charged from the credit union is lower than the one you would be charged by the VA.

The Rural Development Mortgage

The Department of Agriculture is offering the rural development mortgage, but it is not confined to rural land. If you purchase a home in a qualifying area, the Department of Agriculture will charge two percent to guarantee your loan, but this amount can be rolled into the loan.

Upon choosing the most suitable loan for you why not start to look at your possible repayments by using this interest rate calculator.

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