Sign up for our FREE Monthly Email Newsletter
In addition to keeping in the financial know, you may be interested in checking your credit score and report.
¹The credit scores provided under the offers described here use the Equifax Credit Score, which is a proprietary credit model developed by Equifax. The Equifax Credit Score and 3-Bureau scores are each based on the Equifax Credit Score model, but calculated using the information in your Equifax, Experian and TransUnion credit files. The Equifax Credit Score is intended for your own educational use. It is also commercially available to third parties along with numerous other credit scores and models in the marketplace. Please keep in mind third parties are likely to use a different score when evaluating your creditworthiness. Also, third parties will take into consideration items other than your credit score or information found in your credit file, such as your income.
²The Automatic Fraud Alert feature is made available to consumers by Equifax Information Services LLC and fulfilled on its behalf by Equifax Consumer Services LLC.
³Equifax Credit Report Control™ is only available while you have a current subscription to Equifax Complete Premier. Locking your credit file with Equifax Credit Report Control will prevent access to your Equifax credit file by certain third parties, such as credit grantors or other companies and agencies. Credit Report Control will not prevent access to your credit file at any other credit reporting agency, and will not prevent access to your Equifax credit file by companies like Equifax Personal Solutions which provide you with access to your credit report or credit score or monitor your credit file; Federal, state and local government agencies; companies reviewing your application for employment; companies that have a current account or relationship with you, and collection agencies acting on behalf of those whom you owe; for fraud detection and prevention purposes; and companies that wish to make pre-approved offers of credit or insurance to you. To opt out of such pre-approved offers, visit www.optoutprescreen.com/.
4We will require you to provide your payment information when you sign up and we will immediately charge your card $4.95. After that, we will charge the card $19.95 for each month you continue your subscription. You may cancel at any time; however, we do not provide partial month refunds.
Equifax® is a registered trademark and Equifax Complete™ Premier is a trademark of Equifax, Inc. © 2014, Equifax Inc., Atlanta, Georgia. All rights reserved.
For a brief period ten years ago, lenders marketed mortgages with no money down, which made it possible for buyers to circumvent the down payment requirements that would have kept them out of the market. When home values plummeted, these borrowers were some of the first to default. They had invested nothing in their home, and often showed a greater likelihood of simply walking away.
As a result, zero-money-down mortgages have virtually disappeared, and lenders know that a borrower who has little or no “skin in the game” is a higher default risk than a borrower who has put down a significant amount of money.
How to afford a down payment on a house
Today’s large down payment requirement can be a barrier to buying a home, but there are a few ways you can qualify for a loan without putting down 20 percent of the home’s sale price.
Federal Housing Administration (FHA) loans. The FHA’s guaranteed loan program requires only 3.5 percent down from most buyers, though these loans can be often be more expensive than conventional loans. In the past three years, the FHA has raised mortgage insurance premiums and tightened credit standards in an effort to avoid seeking government aid to cover deficits caused by defaults.
Gifts. You can ask your friends and relatives for help in the form of a gift. There may be caps on how big a gift you can accept, so it’s important to talk to your lender ahead of time.
In addition, your lender will want to ensure the gift is not actually a loan that needs to be repaid, as this could throw off your debt-to-income ratio and disqualify you from obtaining the mortgage. The gift-giver will have to sign a gift letter that states the relationship between the parties, the address of the purchased property, the amount of the gift, and (sometimes) the source of the funds used to make the gift. The letter also must clearly state that the funds are a gift and that the recipient does not have to repay them.
Down payment assistance. Take advantage of hyper-local assistance programs sponsored by your local or state housing finance agency. The programs, which often aren’t widely publicized, encourage buyers to settle down in a certain area by offering loans or grants to cover the cost of a down payment. Over 1,600 programs are available nationwide for buyers who qualify. Programs are local and qualifications vary, though most have income limits.
Many of these programs are workforce housing initiatives to encourage people such as law enforcement officers, firefighters, teachers, and nurses to live close to their work, while others are designed to attract young professionals to neglected neighborhoods. Some even provide down payments to encourage buyers to purchase and renovate foreclosures. Find out more about down payment assistance available in your community by visiting www.DownPaymentResource.com.
Steve Cook is executive vice president of Reecon Advisors and covers government and industry news for the Reecon Advisory Report. He is a member of the National Press Club, the Public Relations Society of America, and the National Association of Real Estate Editors, where he served as second vice president. Twice he has been named one of the 100 most influential people in real estate. In addition to serving as managing editor of the Report, Cook provides public relations consulting services to real estate companies, financial services companies, and trade associations, including some of the leading companies in online residential real estate.
The information contained in this blog post is designed to generally educate and inform visitors to the Equifax Finance Blog. The blog posts do not give, and should not be assumed to provide, personalized tax, investment, real estate, legal, retirement, credit, personal financial, or other professional advice. Before making any financial decision, you should always consult with the appropriate professionals who can explain your options, rights, and legal responsibilities, and advise you on any tax, legal, credit, or business implications that may result from those decisions. The views and opinions expressed by the authors of blog posts are their own views and may not be the views or opinions of Equifax, Inc. and/or its affiliates.
Equifax maintains this interactive forum for education and information purposes in order to allow individuals to share their relevant knowledge and opinions with other members and visitors. We encourage you to participate in discussions about personal finance issues and other topics of interest to this community, but please read our commenting guidelines first. Equifax reserves the right to monitor postings to the forum and comments will be published at our discretion. Do you have questions or comments about your Equifax credit report or customer-service issues regarding an Equifax product? If so, please contact Equifax directly. All opinions and information expressed or shared in blog comments are solely those of the person submitting the comments, and don't necessarily represent the views of Equifax or its management.