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¿Va a Comprar Casa? Prepárese para un Pago Inicial más Alto

Buying a Home? Get Ready for a Higher Down Payment

Por Antonia Wang

Buying a home with 0% down is a thing of the past. Tight credit markets since 2007 have made it so larger down payments are required to buy a home. Over 34% of real estate transactions in 2011 had a down payment of 20% or above. (Realtor.org). For those who can't afford such a down payment, FHA loans are an alternative, but this program has also updated their requirements.

According to the Federal Housing Administration, new borrowers are now required to have a minimum FICO score of 580 to qualify for the 3.5% down payment program. New borrowers with less than a 580 FICO score are required to put down at least 10%. That means that If you want to buy a house worth $158,100, you will need to put down at least $5,533.50 with an FHA loan. This does not include possible closing costs of up to 6% of the home purchase price.  Many first-time buyers don't have that kind of savings.

What are your options for buying a home if you don't have the down payment?

Through a Down Payment Assistance Provider (DAP).

You may be able to borrow your down payment through a local non-profit, government entity or gift program. Click here for links to approved DAP providers in your area.  But remember, many assistance providers require pay back. Understand the terms of assistance and be realistic about what you can and cannot afford.

Closing Costs: 

Ask the seller to pay for closing costs. In this market, you may get the seller to pay for closing costs and save up to 6% of the purchase price in up-front costs. In addition, get quotes for title insurance and closing costs from different companies and choose the one that saves you the most money.

Save:

Another option is to wait until you have saved enough for the down payment and closing costs before buying your home. While you save, you can scout better home values, work on improving your credit score and learn more about the actual costs and responsibilities of home ownership. Visit your local credit union to explore some savings options.

Improve your credit score.

The better your credit score, the better interests rates you will get on your mortgage and the lower down payment you will be required to put down on an FHA loan. Here are some tips on how to improve your credit score.

Published 06-07-2012.

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