Market Watch: Do I Really Need to Have a Down Payment?

BY LANCE MILLER

Even though the financial crisis of 2007-2008 decimated mortgage companies’ program offerings, several low-down and zero-down programs never really went away, and new programs are constantly emerging.

  • Many potential homeowners incorrectly assume they must have a significant down payment in order to realize their home ownership dreams. While it is true that the financial crisis of 2007-2008 decimated mortgage companies’ program offerings, several low- down and zero-down programs never disappeared. Now that the financial markets have stabilized, new programs are constantly being released.

    One of the best zero-down programs is backed by the U.S. Department of Agriculture and is often referred to as a Rural Housing Loan. Most mortgage lenders offer these loans, which offers true 100 percent financing at competitive interest rates. As the name implies, the subject property must be rural, but many popular areas along the Wasatch Front meet the

  • requirement, including Tooele and Eagle Mountain.

    An FHA (Federal Housing Administration) loan is also a great option for a buyer wanting to minimize or eliminate any cash requirements. A standard FHA loan only requires a down payment of 3.5 percent, and several options exist for financing the down payment. For example, Utah Housing Corporation offers a second mortgage to cover the 3.5 percent down payment as well as closing costs. FHA loan limits vary by county.

    Bottom line … don’t give up on your home ownership dreams just because you haven’t been able to save a down payment. Many programs exist even beyond what we’ve discussed. Contact your favorite mortgage lender and explore your options.

Lance Miller is CEO of Momentum Loans.

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