Few people can afford to buy a house outright. Fortunately, there are many financing options out there that you can consider. Many of these options are favorable towards buyers as well due to the fact that consumer confidence has been low ever since the economic downturn. The following are a few of the financing options that may be available to you:
- Conventional loans – Most banks offer conventional mortgage loans to buyers, but it’s important to shop around and compare terms. However, you will likely have to pay mortgage insurance if you don’t put down a 20 percent down payment. The terms will depend heavily on your credit history as well.
- FHA loans – FHA (Federal Housing Administration) loans were established as a way to help first-time homebuyers. Because they are backed by the federal government, they offer better rates than most traditional home loans, require smaller down payments and are easy to qualify for.
- Home builder and developer financing – Builders will often offer terms that are below market rates and that are more favorable than bank loans. Some builders will even sweeten the deal by offering 95 percent financing, payment of closing costs, cash incentives, deferred mortgage payments and more.
- VA loans – If you are or were a veteran, then you may qualify for a VA loan, which offers 100 percent financing with no down payment or mortgage insurance requirements.
While there are many home financing options available to you, it’s important that you figure out your budget first before you decide to apply. Remember, just because you qualify for a certain amount, doesn’t mean you can afford it.