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Do I Need a Down Payment to Buy My First Home?

I just read an article on CNN Money called “Secrets to getting a mortgage with so-so credit”. It had some interesting information about different lending parameters with major institutions like Fannie Mae, Freddie Mac and FHA. One of the guidelines listed in the article for Fannie and Freddie is a 20% down payment. I was a little confused by this, as from my experience you can generally secure one of these conventional type of loans with as little as 5% down. The article may have meant that “to secure the best interest rate” a borrower must put 20% down, which is true. The article goes on to say that if a borrower cannot afford this size of down payment, that FHA may be a better option with only a minimum down payment of 3.5%. Also, FHA allows for a much lower credit score than conventional loans without penalizing the borrower with a higher interest rate. Now may be a great time to buy your first home, but in this economy many families may struggle with the ability to save up a minimum down payment of 3.5%. If you’re interested in buying your first home, but even a 3.5% down payment seems out of your reach, there are also great down payment assistance programs offered by the Washington State Housing Finance Commission. First time home buyers (who haven’t owned a home in the last 3 years) may be eligible for up to $45,000 in down payment assistance from the state. You may be able to own your first home for little to no money down. If you would like to find out more about these down payment assistance programs, please go to our Calendar/Reservations page and register for one of our FREE First Time Home Buyer seminars.