Big Down Payment Needed?-Maybe Not

A current myth in residential real estate that is suppressing some first time home buyer sales is that a 20% down payment is required to get a mortgage loan. A recent survey by Freddie Mac showed that over 50% of respondents thought 20% was the required down payment.

Freddie Mac indicates that 40% of home buyers today using mortgage financing are making down payments that are less than 10% and this has tripled since 2010. A senior Freddie Mac executive explains:

• A person can get a conforming, conventional mortgage with a down payment of as little as 5%, sometimes with as little as 3% coming out of their own pockets.
• Qualified borrowers can further reduce the down payment coming out of their own pockets to 3% by getting cash gifts from family or grants or loans from public agencies or non-profits.

Many properties for sale in the greater Lansing area qualify for down payment assistance and they can be searched for on tomieraines.com.

Mortgage interest rates are still at historically low rates and with the down payment requirements substantially below 10%, even going to as low as 5%, many credit worthy first time buyers can pursue the dream of home ownership.

Current home owners wanting to move up to the dream home they formerly thought was out of reach may now be able to make their move.

The first step is to talk with a loan officer at a reputable local lender to see what programs a borrower qualifies for. Many will be surprised by the many attractive options.