The myth that buyers need 20% down to purchase a home may still be preventing renters from entering the home buying market. Even with rising interest rates, now is still the time for renters to become homeowners.
Afterall, rents are rising at an alarming pace, so that new mortgage payment may still be less expensive than renting. This doesn’t even take into account the added benefits of homeownership such as income tax advantages and wealth accumulation through equity appreciation.
The top concerns renters have about becoming homeowners are often not having a 20% downpayment, having less income than they think they need, or not having the best credit score. Key Mortgage has several financing options to mitigate these concerns:
- Key Possible loan – Requirements: 3% down (5% for 2-4 units), A 660 or higher credit score, debt-to-income (DTI) at or around 45%, Household income no higher than 80% of your area’s median.
- FHA loan — Requirements: 3.5% down, 580 FICOⓇ credit score minimum, more expansive debt-to-income percentages, sometimes upwards of 50%.
- Conventional 97 loan — Requirements: 3% down, 620-660 FICOⓇ credit score minimum, 50% DTI maximum.
- Key Home Ready loan — Requirements: 3% down, 620-680 FICOⓇ credit score minimum, 50% DTI maximum, annual income can’t exceed 80% of median income for that area.
- VA Home loan — Requirements: 0% down, 580-660 FICOⓇ credit score minimum, expanded debt-to-income qualifying ratios, must be a veteran, active-duty service member, or spouse of a veteran.
- IHDA loan — Forgivable, Deferred & Repayable options. Depending on the program, offers up to $10,000 in down payment assistance. 640 FICOⓇ credit score required, 45% DTI. Housing income and purchase price limits apply.
For more information about any of these loan options or to learn how to get your renter qualified as a home buyer, reach out to a Key Mortgage loan officer today!