Buying a House with 3% Down


Ask Carolyn Warren

My favorite loan for people who need a minimal down payment is called HomePossible or HomeReady.

It is a 30-year fixed rate conventional loan. HomePossible is backed by Freddie Mac and HomeReady is backed by Fannie Mae. These loans have the identical requirements and identical interest rate, so either one is awesome.

Here’s why I love this loan:

  1. Only 3% down and the seller can pay some or all of your closing costs.
  2. You get the same interest rate as if you were putting 20% down.
  3. You get a reduced monthly mortgage insurance payment.

Requirements:

  • You must show income to cover the total mortgage payment (includes property taxes and insurance) plus your monthly obligations that show on the credit report with a 43% Debt-to-Income ratio. This is very reasonable.
  • If you are a W2 employee, you must show a two-year history of working. It’s okay if you switched jobs.
  • If…

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