Source: Andy Dean Photography
If you want to purchase a new home but struggle to come up with 20% down, you are in for some good news! Lenders are creating new low down payment mortgage programs to help buyers.
These programs are alternatives to the FHA loans because not all banks want to manage the FHA regulations. The programs are designed for those with a low to moderate income and a FICO score of 620-680. Some lenders are using non-traditional methods of evaluating credit scores, such as rent, utility bills, and tuition payments.
Bank of America offers mortgages with 3% down. Qualifications include a FICO score of 660, median income, and it must be the primary residence. Borrowers are not required to pay private mortgage insurance.
Wells Fargo offers the same sort of program to people with a 620 FICO score, which is taken from different sources and a low to median income. This program will count income from other members in the home, like family or renters. Borrowers are required to carry mortgage insurance. JPMorgan Chase has a similar program for buyers with a FICO score of 680.
Quicken Loan’s program is different. It allows for 1% down, and Quicken will give a grant for the other 2%. To qualify, borrowers need a 680 FICO score, a less-than-median income for the county of residence, a debt-to-income ratio of 45%, and they must purchase mortgage insurance.
Citibank has 3% down and will pay closing costs up to $5,000. There is no income limit and does not require mortgage insurance. The downside is the costs that offset these programs, such as higher mortgage interest rates, so it’s best to shop around.