The article emphasizes that homebuyers don't need to save up a traditional 20% down payment to buy a home. Various loan programs, including conventional and FHA loans, permit down payments as low as 3 to 5 percent or even no money down in certain scenarios. Homebuyers should be aware that lower down payments may require private mortgage insurance (PMI), which can be canceled when the homeowner reaches 20% equity in the home. Understanding these options is crucial for anyone looking to purchase property in locations like Austin or San Jose.
You don't need a 20% down payment, depending on your loan type. Loans exist that require as little as 3% to nothing down.
Private mortgage insurance (PMI) is necessary for loans with a down payment of less than 20%. PMI can be removed once 20% equity is achieved.
Different loan types have varying down payment requirements. For example, conventional loans can start as low as 3%, while FHA loans can require 3.5%.
Having a larger down payment can lead to lower interest rates, making it advantageous to save for a bigger initial investment.
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