20% down payment seem impossible when homes in Southern California range from $300K and up for a 3 bedroom, but how about 3% down payment? There are 3 loans out there right now that I know of that offer 3% down payment.
OPTION 1: FHA loan offered by the Federal Housing Administration that offers buyers to purchase a home under FHA loan amount limits. FHA loans are offered through the major banks like Chase, Wells Fargo, Bank of America. If you stop by your local branch, they carry the FHA loan product and you can get a loan approval through them.
(for other states, please refer to the www.fha.com website)
OPTION 2: HomePath Loan
While I was shopping for a home on the homepath.com website of foreclosed home listings up for sell, I found out about HomePath financing. HomePath financing is only available if you are purchasing a home that is owned by Fannie Mae. This loan offers an amazing 3% down payment, no mortgage insurance, no appraisal and seller (Fannie Mae) will pay for your closing costs (of the purchase). This loan is available for primary residences, 2nd homes and investment properties.
***Note that the no mortgage insurance perk of this HomePath financing is a BIG money saver. When you purchase a home with a OVER 80% loan to value, you need to pay mortgage insurance. Mortgage insurance can be .5% of your loan amount. It’s a lot of money. Going with a HomePath loan, the mortgage insurance is WAIVED ***
OPTION 3: HomePath Renovation Loan
Fannie Mae understands that some of the properties they are selling need some renovation, so they’ve created a Renovation Loan that wraps the cost of the renovation into the loan. There is a cap to the loan amount for renovation purchase is $35,000.
For detailed information about the HomePath loans, please go to http://www.homepath.com/financing.html