Mortgage Loan Perception and Reality are Miles Apart

A recent survey sponsored by Wells Fargo & Company pointed to a glaring misconception about downpayment requirements for home mortgage loans.  Forty Four percent (44%) of the survey respondents think that they are required to put a minimum of 20% down in order to qualify for a home loan.  This is shocking.  There has not been a 20% downpayment requirement since the FHA loan was developed in the 1930s.

Today there are four loan programs available to home buyers that allow for a downpayment of 5% or less:

1.  Conventional 95 (5% Downpayment) This is generally the least expensive for the      

homebuyer, however, the underwriting guidelines are more strict.

2.  FHA Mortgage (3.5% Downpayment) FHA mortgage guidelines are more forgiving of derogatory credit and source of downpayment funds.

3.  VA Loan (Zero Downpayment) The VA loan is a no-money-down program available to members of the U.S. military and surviving spouses. 

4.  USDA Mortgage (Zero Downpayment) The U.S. Department of Agriculture offers a 100% mortgage.

While not everyone will be eligible for today's low-downpayment loans it is wise to contact your Expert Mortgage Associates loan professional (in  Illinois) six months before you plan to look for a home in order to put you in the best light to sellers and mortgage lenders.  847-705-7500.