As it turns out, a lot of people think it’s impossible to buy a home in Oregon with a down payment less than 5%. The truth is there are several financing options that allow borrowers to do exactly that. Here’s how you could buy a home in Oregon in 2018 with less than 5% down.
Buying in Oregon With a Down Payment of 5%, or Less
Recent surveys have shown that many potential home buyers believe it’s not possible to purchase a house with a down payment below 5%. One particular study, published by Realtor.com in early 2017, revealed the following:
“The report summarized that 39% of nonowners believe they need more than 20% for a down payment on a home, 26% believe they need to put down 15% to 20%, and 22% believe a down payment of 10% to 14% would work.”
The reality is that many home buyers are able to buy in Oregon with less than 5% down. This is a subject we’ve covered in the past. But it’s an important topic that apparently generates a lot of confusion. So we thought it was time to revisit this topic for people planning to buy a home in Oregon in 2018.
So, how can a person buy a home with less than 5% down? Several ways, actually.
One way to accomplish this is by using the FHA loan program, which has a relatively low investment requirement. Additionally, some conventional mortgage loans offer down payments as low as 3%. And if you happen to be a military member or veteran, you could be eligible for VA mortgage financing that eliminates the need for a down payment altogether.
FHA option: In 2018, the minimum down payment required for an FHA-insured home loan will be 3.5%. This has been the minimum required investment for the last few years, and we do not expect it to change in 2018. Specifically, that’s 3.5% of the purchase price or appraised value of the home, whichever is less. So this is one option for buying a home in Oregon with less than 5% down.
Conventional loan with 97% LTV: Freddie Mac and Fannie Mae, the government-sponsored corporations that purchase home loans from lenders, will buy mortgages with a loan-to-value (LTV) ratio up to 97%. That limit is imposed by the Federal Housing Finance Agency. Conversely, this means that borrowers who use a conventional loan to buy a house in Oregon could potentially make a down payment as low as 3%. This is another viable option for buying a home in Oregon with less than 5% down.
VA loan with 100% financing: Most military members and veterans in Oregon are eligible for VA mortgage financing. The money still comes from a lender, just like any other type of mortgage loan. But the loan gets guaranteed by the Department of Veterans Affairs. Because of the government backing, borrowers can avoid a down payment altogether.
These are just three of the most common ways a person could buy a home in Oregon with less than 5% down. There are other mortgage financing strategies as well, and some of them offer a lot of flexibility when it comes to the upfront investment.
Home Prices Still Rising across the State
Today’s mortgage industry is more flexible than most people realize. This is especially true when it comes to minimum down payments. And this kind of flexibility is important, when you consider the fact that home prices in Oregon have risen steadily over the last few years.
According to the real estate information company Zillow, the median home value for the state rose by 7% over the last 12 months (ending in November 2017). That’s more than double what is considered to be a “normal” rate of growth, based on long-term historical averages. Prices are expected to continue rising in 2018, as well, though possibly at a slower pace.
Higher housing costs can be a challenge for future home buyers. But there are a lot of financing options available these days, and some of them are fairly flexible when it comes to the upfront, out-of-pocket costs. That’s why it’s important to explore your options with a knowledgeable mortgage professional.