The Big Downpayment Myth: Buying a home with little (or nothing) down

I was born and raised in Detroit, Michigan and, like all other major metropolitan areas, we had three television stations to watch – the ABC affiliate, the CBS affiliate and the NBC affiliate. Back then, kids played outside constantly because, frankly, there wasn’t much television that was worth watching. In the late 1960’s, cable entered the marketplace, followed by satellite. Suddenly, there were literally hundreds of channels to watch. Big improvement? Perhaps not.

Today there are hundreds of channels available to every household ,greatly increasing the flow of information. Unfortunately, much of it is inaccurate. To illustrate, let’s consider home mortgages.

Tune to CNBC, Fox Business Channel, MSNBC, Bloomberg TV or any other channel with a business orientation and within one hour, someone will tell you that the days of buying a home with little-or-nothing down are long gone. Absolutely not true! Here are three outstanding mortgage programs to consider.

FHA Home Loan. The FHA home loan is currently the mortgage of choice for many homebuyers. Contrary to what you may hear on TV about 20% downpayments, the FHA loan requires a downpayment of 3.5%. That’s right – 3.5% Further, this loan can be used to buy homes up to a sales price of $346,250 in metropolitan Atlanta. With the sharp price declines of the past several years, that’ll buy a lot of house.

VA Home Loan. Created by Congress following World War II, the VA home loan represents a big “thank you for your service”. For those meeting minimum service requirements, a loan of up-to $417,000 is available with zero – that’s right, zero – down. And as of several years ago, this loan is available to many members of the National Guard and Reserves as well.

USDA Rural Development Home Loan. Although not as well-known as the previous two loans, this mortgage product has recently skyrocketed in popularity. It is designed to encourage the purchase of homes in ‘underpopulated’ areas’. The term ‘underpopulated’ can be quite misleading, though, as large portions of metro-Atlanta qualify for this loan.

Loan amounts vary by county, but are generally between $141,000 and $175,000 in metro-Atlanta. And the required downpayment? (drumroll, please…) ZERO!!!

So, in five minutes you’ve learned of three mortgages that are widely available and require either little-or-zero down. What’s next? First of all, turn-off the TV (it’s all bad information, anyway). Second, call a reputable mortgage broker to discuss the information above. He/she will be very familiar with all three loans and will qualify you in a matter of minutes. Once qualified, contact a good real estate professional (not surprisingly, we can help with this one) and begin the search for one of today’s bargain-priced homes. Discount pricing and zero down… what a concept… what a country!

Monty Haight