If you’re like most people buying a Knoxville home for sale, you’re likely using some sort of financing to buy a house. Depending on what type of financing you qualify for, you’ll likely be required to put some sort of down payment down on a Knoxville home. So, how much money should you plan to put down on a Knoxville home for sale?
The Conventional Loan Route
With a conventional loan, you can put anywhere from 5% or 20% down on a Knoxville home for sale. The amount you’ll be required to put down varies from lender to lender, and can depend on your financial situation. If you put down 20%, you won’t be required to pay private mortgage insurance, which can reduce your monthly payment. But if you put less than 20% down, you will be required to pay PMI, which can increase your monthly payment. For those with money to put down on a house, a conventional loan is a good option.
With the help of an FHA loan, Knoxville home buyers can buy a home with as little as 3.5% down. For buyers with no money to put down, a friend or family can gift them their down payment. Unfortunately, with recent changes to the FHA loan program, FHA mortgages have become more expensive. The annual mortgage insurance premiums associated with FHA loans increased .1%. In addition, borrowers will have to carry mortgage insurance for the life of the loan. [In the past, a homeowner could cancel mortgage insurance after the loan to value dropped below 78%.] While Knoxville homeowners can still use an FHA loan to buy a Knoxville home for sale, with the increase in price, many homeowners may opt to go with a 5% down conventional loan or other loan routes.
No Money Down Loans
There are a few different routes for Knoxville buyers to buy a home with no money down. Here is a breakdown of the three programs.
VA Loans – For those that have served, there is the option of a VA loan. With the help of a VA loan, a buyer can purchase a Knoxville home with no money down, and avoid paying mortgage insurance.
USDA Rural Development Loans – With the help of a RD loan, Knoxville home buyers can buy home in “rural” areas and put no money down. Luckily, there are many areas in Knoxville that are considered “rural” including: parts of Hardin Valley, Karns, Lenoir City, Powell, among other places. RD loans are a great no money down option, with a simpler approval process and low monthly payments.
THDA – With the help of the Great Choice Program, Knoxville home buyers can buy a home with no money down. To help cover closing costs or a down payment, they take out a second mortgage that is 4% of the sales price. The second mortgage is paid back over 10 years with a 0% interest rate. If the home is sold before 10 years, the remaining balance is paid off with the sale of the home.
Are you thinking about buying a Knoxville home this year? If there is anyway Knoxville Home Team can assist you, please let us know, you can give Rick at call at 865-696-9002 or send an email to [email protected]. Kati can be contacted at 865-392-5880 or via email at [email protected]. Also, be sure to check out our Knoxville Home Search Page to see what homes are for sale in the Knoxville area.