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How to Buy a Home without Putting 20 Percent Down in Irvine, CA

Buying a House without Putting Down 20 Percent

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The down payment is likely one of the greatest hurdles to buying a home for sale in Irvine. Traditionally, mortgages require a 20 percent down payment to avoid costly private mortgage insurance (PMI). The good news is there are many ways to buy a home without putting 20 percent down. Here are your best options.

FHA Loans

FHA loans have among the easiest loan qualifications in terms of credit score and down payment requirements. You can qualify for an FHA loan with as little as 3.5 percent down. Keep in mind you will need to will pay an upfront and annual mortgage insurance premium (MIP) if you put down less than 20 percent with an FHA loan. The upfront MIP is 1.75 percent of the loan amount. The annual premium, which is added to monthly payments, ranges from 0.45 percent to 1.05 percent of the loan amount.

VA Loans

Most military members, veterans, National Guard members, and reservists can qualify for a VA loan, which is one of the most affordable mortgages available. A loan guaranteed by the VA does not require any down payment, making it one of the few 100 percent financing options available. VA loans don’t require mortgage insurance either, but you will pay a funding fee based on the nature of your service, the size of your down payment (if any), and whether you’ve had a previous VA loan. With no down payment, the funding fee is 2.15 percent the first time you take out a VA loan. This fee drops to 1.5 percent if you put down at least 5 percent and 1.25 percent if you put down at least 10 percent.

Fannie Mae Programs

The HomeReady mortgage program is designed for buyers with low to moderate income. This program only requires a 3 percent down payment and it has unique income requirements, as the income of everyone in the household can be included. The Conventional 97 program is similar because it allows you to buy a home with 3 percent down with no credit requirements.

Conventional Loans

Conventional loans are often associated with a minimum 20 percent down payment, but there are many options for getting a mortgage with a low down payment. Most lenders allow down payments as low as 5 percent, although this usually requires private mortgage insurance until you reach a loan-to-value ratio of 80 percent.

First-Time Homebuyer Grants

You may also qualify for a grant or low-interest loan from the city or county that can be used for your down payment. Orange County’s Mortgage Assistance Program (MAP) offers down payment assistance loans to low-income first-time buyers. This program does have some restrictions, including annual household income and home purchase price.

Sweat Equity Programs

Sweat equity programs allow you to work to earn your down payment by assisting with the construction of your home or other Irvine, CA, real estate. These programs are typically run by nonprofit organizations like Habitat for Humanity. To qualify, you must meet residency, credit, debt, and income guidelines. You must also have a need for improved housing such as living in temporary housing or spending more than 35 percent of your monthly income on housing.

Make sure you determine how much money you can put down before you start searching for houses, condos, or townhomes for sale. Irvine, CA, has many great properties on the market, and a trusted real estate agent from OC Residential can help you find the perfect home. Give us a call today at 714-454-6304.

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