couple worriedMost people back out of owning the home of their dreams for the fear of not having enough money for their down payment. However, these people often have misconceptions about how much is truly needed to own their new home! Here are some facts to help you prepare you for your “intimidating” down payment on your new Florida home.

You Most-Likely Don’t Need 20% Down

That’s right – One of the most common homebuying myths ever told is that you’ll need 20% of your new home purchase in cash before you can proudly own your new home. While having a large down payment does lower your monthly mortgage payment by a couple of dollars, handing over 20% for a new home is uncommon and, for most, unreasonable. According to a study conducted by the 2015 National Association of Realtors®, the average down payment for people born in Generation Y (1980s-1990s) was as low as seven percent and just ten percent for Generation X.

The average down payment hasn’t been around 20% since the Silent Generation (1920s-1940s) when the average home cost less than $10,000, meaning Grandma only put about two grand down on a brand-new home and gas was a mere 11 cents a gallon. How times have changed!

Different Loan Options Vary in Down Payment

Fortunately, forking over an unimaginable lump sum of money is not the norm and plenty of loan options have been created to help people in these circumstances. Highland Homes even offers loan programs through our preferred lenders where you can purchase with as little as $99 down with qualification! Here are a few popular loan options when financing your new Florida home:

Conventional Loans – One of the most efficient ways to buy a new home is through a conventional loan program. Conventional loans (or conforming loans) are meant to conform to a set of guidelines set by Fannie Mae and Freddie Mac. Highlights include paying as little as 3% down, spreading out payments at a 10-, 15-, 20-, 25-, and 30-year repayment periods, and lower mortgage insurance costs than a FHA loan.

FHA Loans – A Federal Housing Administration (FHA) loan is provided by the federal government and is especially popular with first time homebuyers. With low qualifying credit scores, FHA loans have become the most comfortable loans to apply for in the United States. FHA loans also provide the benefit of a low down payment of as little as 3.5%.

VA Loans – Veterans Affairs (VA) loans are intended to help military heroes like Servicemembers, Veterans, and eligible surviving spouses become homeowners. VA loans are provided by private lenders and banks and are guaranteed by the U.S. Department of Veteran’s Affairs at extremely competitive rates. The major benefit of a VA loan is that there’s little to no down payment on your new home! Plus, there’s no mortgage insurance required which significantly lowers your monthly payments.

USDA Loans – Also known as the USDA Rural Development Guaranteed Housing Loan Program, this loan is used to help rural Americans realize their buying potential and achieve their dreams of homeownership. The program partners with selected lenders throughout the United States who will distribute loans with a repayment guarantee from the USDA – thus increasing your borrowing potential and giving you better rates! A USDA loan gives you the benefit of no money down on your new home and only $99 out of pocket, covering your credit report and appraisal fees. USDA loans offer a 30-year fixed interest rate, and easy credit approval. While the USDA services a wide variety of locations in Florida, there are some restrictions on eligible geographic areas so be sure to contact our preferred lenders for help with jurisdictions.

There Are Down Payment Assistant Programs

If you are still not feeling confident in your down payment abilities, you can always apply for Down Payment Assistance. There are a wide range of Down Payment Assistance (DPA) Programs that can help you get into the home of your dreams. The Florida Hardest Hit Fund (HHF DPA) is a program available in specific areas for first time homebuyers and homebuyers that have not owned a home for 3 years. This gives homebuyers the ability to qualify for up to $15,000 in down payment assistance that is forgiven as long as you reside in your home for 5 years and meet their requirements. There are also bonds available for most loan programs including FHA, VA, and USDA plus, county bonds are also available and can provide up to $7,500 in assistance. For more information and to answer any additional questions you may have on these convenient down payment assistance programs, contact our preferred lenders.

How Should I Prepare for My Down Payment?The deal

Just think – you may be able to start building your dream home for as little as $99 out of pocket! While you probably don’t need as big of a down payment as you once assumed, clearing off your debt and increasing your savings can help to maximize your buying potential. Taking care of your finances can grant you a larger loan and give you a bit more wiggle room when designing your new Florida home with upgrades, choosing your favorite premium home site, and paying closing costs.

If you’re just starting down the path of homeownership, chat with a Highland Homes preferred lender today to discover your buying potential. By choosing to finance your home purchase with a Highland Homes preferred lender you will save money on closing costs, take advantage of competitive interest rates, and work with a team dedicated to making your home buying dreams come true.

Please note, the information contained in this blog is provided as a courtesy and should not be solely relied upon for home buying advice or information. The information provided in this blog was accurate at the time of publication but has not been verified since. Please consult with your financial, tax, legal and/or real estate professional for more details.