For many home buyers in Oregon, the down payment represents the biggest obstacle to homeownership. But it may only be a perceived obstacle. The truth is, there are several ways for buyers to reduce their down-payment expenses when buying a house.
This article explains one strategy for buying a house in Oregon with little to no money down — by using a mortgage program with a low investment requirement, along with gift money from a third party.
Buying in Oregon With Little or No Money Down
There are many misconceptions regarding down payments when buying a house in Oregon. Surveys conducted earlier this year by the National Association of REALTORS and other groups revealed that many people think they need at least 20% down to buy a house. The reality is there are financing strategies available that allow people to buy a house in Oregon with little to no money down.
One way to accomplish this goal is to use a mortgage program with a low minimum required investment, in combination with gift money provided by a third-party donor.
Related: Oregon housing costs on the rise
The FHA Down Payment Strategy
Let’s use the FHA loan program as an example. This mortgage program (which relies on government-provided insurance) allows eligible borrowers to make a down payment as low as 3.5% of the purchase price. So it’s a relatively low-down-payment mortgage option for Oregon home buyers.
But the benefits don’t end there. The Department of Housing and Urban Development, which manages the FHA loan program, allows borrowers to accept gift money to cover their “minimum required investment.” So a home buyer who uses an FHA loan could receive gift money to cover some or all of their down payment expense. The money could come from a family member, a close friend, an employer, or other approved sources.
Conventional mortgage loans offer low down payment options as well. That’s because Fannie Mae and Freddie Mac (the government-sponsored enterprises that buy loans from lenders) both purchase loans for up to 97% of the home value. And, like the FHA program mentioned above, many conventional mortgage products allow for down payment gifts as well. So this could be another path to buying a house in Oregon with little to no money down.
VA Loans Offer 100% Financing to Military Borrowers
While it’s limited to a select audience (military), the VA loan program is another way to buy a house in Oregon with little or no down payment. This government-backed mortgage program is unique in that it offers 100% financing to eligible borrowers.
Additionally, people buying a home in Oregon with a VA loan can also avoid mortgage insurance in most cases. So there are multiple advantages to using this particular program.
Overcoming Obstacles to Homeownership
For Oregon home buyers with limited funds in the bank, the down payment can represent an obstacle to homeownership. But it might not be as big of an obstacle as you think. There’s actually a lot of flexibility in today’s mortgage industry. Flexible loan programs and down payments gift options can allow some Oregon home buyers to purchase a house with little to no money down. So it’s important to research all of your mortgage financing options — and that’s where we come in.
Have questions? Sammamish Mortgage is a local, family-owned company based in Bellevue, Washington. We serve the entire state, as well as the broader Pacific Northwest region. Please contact us if you have mortgage-related questions.