By Richard Varner
New data shows that lenders are warming up to home shopper lacking big down payments. For the last several years, borrowers looking to purchase a home without a large down payment had only one option, Federal Housing Administration or FHA loans. These government backed loans only require a down payment of 3.5% of the purchase price. However, the costs of these loans are rising steadily as the government seeks to reduce the risk to tax payers.
Because the health of the real estate market was in question, none of the private lenders were willing to offer low down payment loans and compete with FHA. But now that prices are rising, many of them can no longer sit on the side lines. Borrowers now have options! Conventional loans are easier to get and cost less than FHA loans, while requiring as little as 5% down.
The industry is still a long way from the easy lending standards that caused the housing bust. Borrowers now must show a strong credit history and documented income to get loans. But competition and rising home prices will continue to drive down minimum down payment requirements and closing costs. A welcomed change for those hoping to take advantage of historically low interest rates and affordable home prices!
Richard Varner, P.A. is a licensed REALTOR who grew up in Orlando, graduated from UCF, and currently resides in Avalon Park with his wife Jill and daughter Kinsley. He leads The Varner Group, a Thomas Lynne Properties company and enjoys helping buyer and sellers achieve their real estate goals by providing excellent customer service and expert advice. You can learn more about Richard and his company at www.TheVarnerGroup.com