For many, including recent college grads or young families, having thousands of dollars in savings for a down payment is a challenge, but that doesn't mean they can't afford monthly mortgage payments.
The good news is that a 20% down payment is not the barrier to homeownership that these prospective homebuyers think it is. For them, other options — including a 3% down Freddie Mac Home Possible Advantage® mortgage — are the perfect fit.
Are you looking to take advantage of a 3% down payment? Here are the three steps that you need to know.
Talk to your lender. We work with thousands of lenders nationwide so there's a good chance your lender offers an option like the Freddie Mac's Home Possible Advantage mortgage — though they may call it a different name. If not, you may want to shop around.
Plan to live in the home. To qualify, you must live in the home you are buying. You can also refinance your existing mortgage without taking any cash out. It's available in 15–, 20–, and 30–year fixed–rate terms.
Gather enough money. You must have funds to cover the down payment and the closing costs. The good news is that these do not need to be your own — the 3% down payment can come from a number of sources, including personal funds, gift funds, grants and affordable second mortgages. Last year, over 20% of 55+ homeowners said that they have helped family and friends with a down payment.