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You are here: Home / Buyers / You Don’t Need 20% Down to Buy a House Anymore

You Don’t Need 20% Down to Buy a House Anymore

September 26, 2014 By Rebecca Jacks

Lending rules have eased up again. You won’t hear too much in the media, because honestly I don’t think they want to draw attention to another “mortgage meltdown” brewing. Lenders aren’t handing out money as easily as they were pre-mortgage meltdown, but they are making it easier for buyers to buy homes.

you don't need 20% down to buy a house anymore

Loans Where You Don’t Need 20% Down to Buy a House

If you want to buy a house, but aren’t too keen on any down payment alternatives, check out these loans where you don’t need 20% down to buy a house in Austin.

Conventional Loan With 5% Down

Today, you can get a conventional loan (traditionally reserved for borrowers who have 20% down) with as little as 5% down. This option has become increasingly popular for buyers who want to keep as much cash in their pocket as possible.

Will I Need Mortgage Insurance?

Mortgage insurance is an insurance policy that compensates the lender for losses if a buyer doesn’t pay their loan. Mortgage insurance doesn’t apply to the principal of the loan and can add several hundred dollars a month to the buyer’s payment. Traditionally, borrowers who put less than 20% down are required to purchase mortgage insurance for the lender. But, now there is a work around.

Second Loans are Back

Second loans help buyers get conventional loans with less than 20% down and still avoid paying mortgage insurance. Lenders are now giving borrowers a second loan for the difference (15% second loan with 5% down). This way, the first loan is still 80% of the purchase price and you don’t pay mortgage insurance and don’t have to come up with a 20% down payment.

FHA Requires 3.5% Down Payment

FHA is another option for buyers whose credit scores don’t qualify for a conventional loan, or for those who don’t have 5% to put down. FHA loans have higher closing costs, but do offer an opportunity for buyers who wouldn’t otherwise be able to buy a home be home owners.

Some Loans Require 0% Down Payment

If you are a veteran and qualify for a VA loan, you won’t have to put any money down in order to buy a home in Austin priced at $417,000 or below. This loan is not geographically constrained, so you can purchase anywhere in Austin as long as you qualify for the loan (veteran status, income and credit requirements).

A USDA loan is another 0% down payment loan. To qualify for this loan, you’ll have to buy a house in a USDA approved area. Usually these areas can be found in the suburbs of Austin. Buda, Kyle (and virtually all of Hays County), Leander, Round Rock, Georgetown and Pflugerville all have USDA eligible areas. If you’re purchasing a home in a USDA eligible area, this loan is a great way to keep more money in your pocket.

Looking for a Great Lender Who Can Help You Get a Loan with Less than 20% Down?

We work with a few great lenders who not only have great rates, but who have a variety of loan programs for borrowers who don’t want to put 20% down. If you’re ready to have a conversation with an experienced lender who can help you structure a loan that won’t break your bank, email us at info@11OaksRealty.com and we can send you our lenders list.

Want to Buy a Home in Austin with Less than 20% Down?

Our team of buyer’s agents have the market experience and have helped thousands of buyers in their combined 58+ years of experience in real estate. We take a consultative approach and help you buy a home, rather than hard selling the first home you see. We know buying a home is a process and we’re here to help make sure it is done right. Check out our Austin Home Buyer page to learn more about our team and how our Buyer Representation Program is different than most Realtors. Then, fill out our Buyer Survey, email us at info@11OaksRealty.com or call us at (512) 827-8323 to schedule a no obligation consultation.

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Filed Under: Buyers Tagged With: Affordable Homes, Down Payment Assistance, Getting a Loan, Researching Your Move

About Rebecca Jacks

Rebecca has founded her success in real estate on a commitment to personalized service. Clients appreciate her dedication to not only the success of their transaction, but their very peace of mind. She is particularly adept at creating bridges to make home buying and relocation as seamless as possible.

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Raymond Stoklosa – Broker/Owner, CRS

Raymond Stoklosa is the Chairman and Managing Broker of Eleven Oaks Realty. Raymond has been a respected authority in residential real estate since 1978. Having sold more than $150 million worth of real estate... Read More…

Rebecca Jacks – CRS, ABR, SFR

Rebecca Jacks is the Chief Operating Officer of Eleven Oaks Realty. She specializes in relocating buyers and home sales in Austin and surrounding suburbs. Rebecca brings a passion for customer-service to the leadership team. Read More…

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Cassandra joined Eleven Oaks Realty following a successful career managing digital campaigns at several household brands including Walmart, L’Oreal, and Golfsmith. She has also worked in real estate marketing in three of the hottest markets in the U.S. – New York City, San Francisco and Austin. Read More…

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