HOW TO BUY REAL ESTATE WITH LOW DOWN PAYMENT
Last week, I shared some insights on how to purchase a home with no down payment. While several programs are available to help make this possible, not everyone qualifies.
I’m currently working with clients who are purchasing a home they plan to live in. We explored a number of 100% financing options, but unfortunately, none of them worked in this case. Here’s why:
Credit Score Requirements: Most zero-down programs require a minimum credit score of 680. In this case, the clients had score 679 —just below the threshold.
Income Limits: Some programs set a maximum income limit to qualify, which the clients exceeded.
Debt-to-Income (DTI) Ratios: Other options were disqualified due to strict qualifying ratios.
Loan Limits: There are also maximum loan limits set by agencies like Fannie Mae and FHA. In the area where the property is located, the loan limit is $685,000, which further narrowed the options.
The Solution: An Old-Fashioned FHA Loan
In the end, the most practical and accessible solution was an FHA loan. FHA loans require only a 3.5% down payment, offer competitive interest rates (in this case around 6% to 6.25%), and can include lender credits or seller contributions to cover closing costs.
Now, they are just negotiating the final sales price with the seller.
If you’re considering buying a home and are unsure how much you need for a down payment—or if you qualify for any low or no-down-payment programs—let’s talk. Every situation is unique, and there may be more options than you think.
Have questions? Call me anytime: (415) 225-7920 Let’s find the right loan for you! I promise to help! Meanwhile, click on this link watch and listen to my brief remarks on the subject and beyond.
Manny Kagan,
President,
Pacific Bay Financial Corporation
Your professional mortgage broker since 1983
NMLS #205637
DRE #00874630