Here's How You Can Buy a House With Only a 3.5% Down Payment

If you want to buy a house but can't afford a 20% down payment, there's an alternative that might still make it possible to do so. Known as an FHA loan, after the Federal Housing Administration, these require a homebuyer to put only 3.5% down to qualify for a mortgage. And to further sweeten the pot, this type of mortgage is easier to get for people with low credit scores.

The one downside is that they're slightly more expensive. As Motley Fool contributor John Maxfield discusses in the following video, there are two specific added costs associated with getting an FHA, as opposed to a conforming, mortgage. The first is an upfront payment for mortgage insurance equal to 1.75% of the mortgage amount. And the second is an annual insurance fee over the life of the loan equal to between 1.3% and 1.55% of the credit line.

But even with these added costs, taking the plunge may still be worth your while, given the mortgage interest deduction and the opportunity to start building equity.

Owning a home isn't the only tax "loophole" you can use
Recent tax increases have affected nearly every American homeowner and taxpayer. But with the right planning, you can take steps to take control of your taxes and potentially even lower your tax bill. In our brand-new special report "The IRS Is Daring You to Make This Investment Now!," you'll learn about the simple strategy to take advantage of a little-known IRS rule. Don't miss out on advice that could help you cut taxes for decades to come. Click here to learn more.


Read/Post Comments (0) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2907878, ~/Articles/ArticleHandler.aspx, 10/23/2014 8:03:51 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement