Lake Region Bank has several low down payment options for homebuyers. Some options require you to be a first-time homebuyer, but some do not. Let’s take a closer look at our low down payment home loan options.
USDA Zero-Down Loans
The USDA offers a zero-down loan to eligible borrowers in eligible areas. You do not need to be a first-time homebuyer, but in most cases, you cannot own another home. This loan is designed for moderate to low-income borrowers. There are income limits that change by county and increase with the number of people in a household. To be eligible for a USDA zero-down loan, you must have at least a 580 credit score.
If you qualify, you can use a USDA zero-down loan to borrow up to 101 percent of the appraised value of the home. If the house appraises for more than you are buying it for, you could borrow money for some of your closing costs or home improvements.
This loan is intended for single-family homes that people intend to live in. Rural properties can have up to five acres of land. Townhomes and some condominiums may also be eligible.
Conventional Home Loans with Low Down Payments
There are two different conventional loans that start with 3 percent down payments. The first loan requires you to be a first-time homebuyer. It also has income limits depending on the area you live in and how big your household is.
The other option is a home loan through MN Housing. If you do not have money for the down payment and closing costs, MN Housing offers a down payment and closing costs loan that Lake Region Bank can pair with a 3 percent down payment first mortgage. The first mortgage must be done through MN Housing. They require that you contribute $1,000 of your own money. There are income limits with this program, too.
FHA Loan with Low Down Payment
The final low-down payment type Lake Region Bank offers is an FHA loan. This is a good option for people that do not qualify for the MN Housing loan because they make too much money. FHA loans are more forgiving of past credit issues and allow for higher debt-to-income ratios than conventional loans. The minimum credit score we require on an FHA loan is 580.
If you are unsure what type of loan you need, talk to our mortgage lending team and they will help determine what you are eligible for and what type of loan is right for you. We look forward to serving you!