Dreaming of your owning your own home, but the cash flow just isn’t there. With rents on the rise, most people probably don’t have $25,000 laying around, which is 20 percent of the average home price in Greensboro, NC.
QUESTION: Do you still need a 20 percent down payment to buy a house?
PROCESS: To verify, we reached out to Senior Loan Officer, Daniel McCoy, at MVB Mortgage, as well as several other loan officers from different agencies who declined to go on camera. All said, the down payment isn’t as much as one might think.
“The way it used to be decades ago was that you had to put 20 percent down to protect the bank in the case of default,” said McCoy. “Once the housing crisis hit, everyone thought you had to put 20 percent down which never really went back that far. Nowadays, you can put at little as no money down. It just depends on the type of program that works for you.”
For an FHA loan, you might need three percent down and for a conventional loan, you might need between three and five percent. Veterans, military and those living in rural areas could qualify for 100 percent financing.
McCoy said when buying a house, keep in mind your budget, what you’re comfortable paying and how long you plan to live in the house.
“You want to stay at least 4 to 5 years to build equity and pay down principle balance on the mortgage.”
Also, check with a mortgage company before picking out a house and gather the amount of money you can afford to put down, whether that be three, five or 20 percent.
“It’s helpful. It lowers your monthly payment, it strengthens your application as a borrower making that sort of down payment, but it’s not required.”
So, we can verify. A 20 percent down payment is helpful but not always needed.
Also, several places in the Triad, have down payment assistance programs.
Guilford County http://www.greensboro-nc.gov/index.aspx?recordid=7389&page=36
Other resources for help http://www.nchfa.com/home-buyers
Daniel McCoy, Senior Loan Officer, MVB Mortgage