With high housing prices and high costs of living in many cities today in day, it’s hard to save money to buy your own home. Up to 20 percent payment is a challenge. However, low down payment loans can help meet the requirements to satisfy mortgage lenders. Some mortgage lenders, however, require that you obtain insurance for the loan to make sure they will be compensated if you cannot or refuse to pay the mortgage. A buyer must meet certain requirements to be eligible for low down payment loans.

Under hitch

Most mortgage lenders require at least 20 percent payment before lending money for a mortgage. The low down payment loans require about 3 to 3.5 percent of the mortgage payment. This is becoming a common scenario for homebuyers for the first time, because they tend to use their money to buy furniture or pay off student loans and other debts.

Private Mortgage Insurance

Private mortgage insurance allows the home buyer first time pay only 3 percent. While mortgage lenders require 20 percent may be considered less if the buyer acquires a private mortgage insurance. Mortgage insurance protects the lender in case you do not fulfill your mortgage payments.

Eligibility

To qualify for a low down payment loan, homebuyers must meet the criteria determined by the private mortgage insurance company. The buyer must prove sufficient income to cover the monthly mortgage payment. A designated amount for the down payment, as 3 percent of the mortgage is required.

Buyers should also have a good credit history. A good credit rating means that the buyer pays your bills on time and does not represent a risk for lenders. The buyer should also get a home appraisal, evaluation must at least be equal to the purchase price to be a profitable investment for the insurance company.

Mortgage

The cost of mortgage insurance can vary from one company to another, however, normally costs about 0.5 percent of the mortgage amount for each year. Some lenders cancel the insurance once the buyer has paid 20 percent of the mortgage. In addition, homeowners may be able to leave the safe if an updated assessment indicates that the mortgage housing has increased due to an increase in the value of the house.