In the past, lenders have required at least 20% down payment on a home loan. However, new financing programs only require you to put 3% down, or even 0% down in certain geographical areas of the Peninsula. (For a $300,000 home, a 3% down payment is $9,000.)
How Can I Buy With No Money Out of My Own Pocket?
Certain programs allow your down payment and closing costs to be a gift. This means if Mom or Dad, or other family members are willing to put up the money for your down payment and closing costs, you could potentially come to the closing table with none of your own money. As long as you can qualify for the loan and can make the monthly payments, gift money is ok.
What if I Don’t Have Any Family Members Willing to Give Me Money to Buy a Home?
As a first time home buyer, if you purchase a home before December 1, 2009, you qualify for an $8,000 tax credit from the federal government, which may now be used towards closing costs. Also, with certain loan programs, sellers are allowed to contribute up to 6% of the purchase price towards closing costs as well. Plus, if you buy a new home, you may be eligible for California’s $10,000 tax credit in addition to the federal income tax credit.
I’ve Heard You Need Cash Reserves to Qualify
Not always. Certain loan programs do not require cash reserves. Before, lenders required you had a few months cash reserves in the bank so you could still make your mortgage payment if you lost your job. Now, there are programs available that will allow you to spend every last penny in your bank account in order to close the loan, although we don’t recommend you do that.
How Can I Find Out How Much I Can Afford?
To find out how much you can afford, send us an email or give us a call at (650) 520-0915. We’ll evaluate your financial situation and show you what you can afford with no obligation or commitment.
Ready to apply now? Check out our secure online mortgage application.
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Chris Williamson is a Mortgage Advisor with Mortgage California specializing in San Mateo Mortgage.
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