The Low Down on Low Down Payment Mortgages

Derek and Tonya are your typical couple in their late 20’s. They both work and together rent a small apartment in the city. The rent is crazy high, but they don’t feel like they have any other options. One night, Derek finished giving their beautiful 8 week old little girl a bottle. Once he put her to bed and sat down to eat dinner with Tonya, her phone dings with alerts from a real estate website showing there are new listings in their area. While they eat their burnt chicken from one of those gourmet delivery services, where they give you all the ingredients and you cook it, Tonya says, “We are running out of space here, Derek. I know we can afford the payment on these houses. Look at this one, it’s perfect!” Derek replied, “Yeah, but we only have $11,000 saved up and 20% down on most of these houses is almost $60,000. I don’t like squeezing in this tiny apartment or paying rent either, but we are going to be here for a while.”

Despite the information-overload world we live in, this type of thinking is still commonplace. In fact, in a recent MBA survey roughly 57% of non-homeowners believed that their financial situation (including savings) was a deterrent in buying a home. Over the course of the last 10-15 years there have been many “first-time homebuyer” and “low down payment” mortgages available, but many of those have left the market postmortgage meltdown. So, what are potential borrowers to do? Turns out, that there are a handful of amazing lowdown payment mainstream mortgages still available that allow for zero to three percent down, depending on the product. Fannie Mae Home Ready and Freddie Mac Home Possible are two of the strongest options, both have a minimum down payment of three percent, and can carry reduced mortgage insurance! Additionally, veterans may still qualify for 100% financing for purchases. Live in a rural area? USDA mortgages can also be 100% financing!

Clearly, low down payment options are still available, but mortgage information is often difficult to sort through and can make a borrower go cross-eyed when educating themselves. To make the problem worse, mega-banks and online mortgage lenders don’t always provide borrowers with the information and guidance needed to make one of the biggest financial decisions of their lives. Enter, the community banker. Instead of figuring out mortgages alone or feeling like a number with some lenders, potential buyers should turn to community banks for advice, guidance, and mortgage financing. The community bankers and community mortgage lenders that partner with me are some of the best in the business at presenting options, talking through decisions, and helping first-time or repeat homebuyers buy the home of their dreams.

Knowledge on these options is second nature to many banking professionals and is something often taken for granted. For other bankers, this may be the first they’ve heard of such programs. Either way, last month was National Homeownership month and I challenge Georgia’s community bankers to continue to remind people in their respective markets that home ownership may not be as far away as they think. If you would like to know more about aforementioned types of mortgages, please feel free to reach out to me and I would love the opportunity to chat. Home ownership is the backbone of the American Dream and the foundation upon which most of the household wealth is generated in the United States. Let’s do all we can to make the dream happen and make Georgia better one home at a time.

Skip Willcox Account Executive Crescent Mortgage Preferred Service Provider

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