Are you looking for more creative ways to finance a home this year? There is not just one correct way to finance a home and you may not know that there is a better finance option out there for you.
If you’re hoping to learn more about the different mortgage, home loan, and finance options out there that may be available to you, keep reading. In this guide, we will go over some creative ways to finance your home in 2021 so that you can find your dream home.
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1. Apply for a Conventional Mortgage
One of the most common ways that homeowners go about purchasing a home is by applying for a conventional home mortgage. This financing tool is derived from lenders such as banks and credit unions. They often require that you have a credit score of at least 620 to apply and that your debt to income ratio is at least 50%.
While the amount of downpayment will vary with this finance option but you will likely need private mortgage insurance if the downpayment you put down is less than 20%. With a conventional loan, you will likely have a larger out-of-pocket cost but will have lower amounts to borrow over the lifetime of the loan. This is the best housing finance option for those with significant savings, good credit scores, and great employment history.
2. See if You Can Qualify for a Government Issued Loan
Even if you don’t qualify for a conventional loan or mortgage type you may be able to qualify for a loan backed by the FHA, or the Federal Housing Association. You might also look at securing a loan with the U.S. Department of Agriculture, or the USDA. If you’re a veteran, look into getting a loan from the VA, of The Department of Veteran Affairs.
State a local governments may also offer homebuyer assistance programs with discounted rates, downpayment assistance, closing cost assistance, or tax breaks. However, you tend to need a credit score of at least 500 to qualify for these loans as well as some extra documentation to prove that you qualify for varying loans. You likely also need to get mortgage insurance as well, as it is often mandatory with these kind of loans.
For those that do not have much in savings, this can be a great finance option due to the lesser downpayment requirement. Head t the link to learn about FHA loan benefits.
3. Rent to Own
If you are hoping to buy and own a home, renting may not seem like the most attractive option to you. However, a rent-to-own agreement can be a good last resort for many potential homeowners. While the situation will vary based on each unique agreement, in most cases, one will live on a property as a tenant for an agreed amount of time and as they build up their savings and strengthen their credit score.
Finance a Home Today
As you can see, there are many options when it comes to how to finance a home.
Head to the “How To” section of our site for more.
