The prospect of purchasing your own home can be one of the most exciting times of your life – until you see how much you’ll need for a down payment, that is. Add in closing costs – for real estate in Riverside, Orange, or Los Angeles County you could be looking at 1% of your loan, or more – and the upfront burden may be overwhelming.
Most conventional loans require between 3-20% down, with your credit score and financial picture influencing the final number. For competitive markets like real estate in Los Angeles County, where the average home sale price in June 2017 rose to $569,000, coming up with enough money for a down payment may be out of your reach.
But that doesn’t mean you can’t own your own home. There are numerous programs available to help borrowers get in a house with little-to-no upfront down payment. You’ll need to hit specific criteria in order to qualify, but many programs are designed to help those who may have trouble qualifying for a conventional loan.
These programs are tailored specifically for each potential buyer,, so you’ll need a seasoned loan officer close by to walk you through the process.
The most popular government-backed loan programs with low down payments include:
- Federal Housing Authority (FHA) Loans: FHA loans can have down payments as low as 3.5%, and you won’t find the same stringent credit requirements as might would with private lenders. You’ll have to pay an additional small fee rolled into your loan as an insurance premium.
- Department of Veteran Affairs (VA) Loans: With no down payment required and no included mortgage insurance, this program allows past and current service members and their families to access homeownership. You will have to pay a small “funding fee” which is usually between 2-2.4% although this will get rolled into your total cost.
- US Department of Agriculture (USDA) Rural Development Loans: USDA loans are designed to get first-time buyers in homes in specific geographic regions – although not necessarily in rural farmland. The USDA map identifies areas and properties that qualify for the program, some of which can be described as almost urban in location – if you’re looking for real estate in Corona, just expanding your search a little bit can expand property eligibility. The good news? No down payments, and small fees: 1% upfront, and an annual fee of .35% of your balance.
- CALHFA down payment assistance: These programs are designed to get a first time home buyer into a home with close to ZERO down payment. Not everyone will qualify, but if they do these programs can be great financing options in Corona, Riverside, Orange, and Los Angeles Counties.