Friday, February 14, 2014

Low and no money down home loans - wave3.com-Louisville News, Weather & Sports

Low and no money down home loans - wave3.com-Louisville News, Weather & Sports


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For both the popular FHA and the lesser known USDA Rural Housing Service (RHS) loans, the borrower must have a credit score of 640.


FHA loans require at least 3 1/2% down, and there's a loan limit just over $300,000.  For USDA's RHS loans, there's an income limit that's not much higher than the average income in the area of the home.  And the home must be in a qualifying area.  Jefferson County homes do not qualify for RHS loans, but homes in all of Shelby, Oldham and Spencer Counties and in pockets of Bullitt County do qualify.





With no money down and the lowest monthly payment.  Poole says between the two option, RHS is often the way to go.

All low or no down payment loans come with a price called PMI, a Private Mortgage Insurance that the lender charges so that the buyer can get the loan without that 20% down.

The PMI is more costly up front on an RHS loan, but Poole says the monthly premium added in on the FHA loan is much higher and in the end will cost more. 

"Couple that with the fact, you don't have to make a down payment and 99 out of 100 times the RHS deal is better than the FHA deal" Poole said. 

Low or no money down mortgage options are a surprising welcome mat to lots of potential home buyers often giving people the key to home affordability. 

Another low  money down option is a conventional loan with as little as 5-percent down, but if your credit score is below 740 you'll get penalized with a higher interest rate and you'll pay PMI with this too. 

Some other guidelines apply with these loans, like a buyer can't own a home while getting a USDA RHS loan, but if you sell your home, then you may qualify for the loan. 










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