Millennial First-Time Home Buyers and FHA Mortgages
The information reported by Realtor.com and other real estate themed websites also indicates an interesting trend among Millennial home buyers; they are paying just under 9% down, which is lower than both GenX real estate buyers or Baby Boomers.
Some first-time home buyers choose to make a larger down payment in order to reduce the principal of the home loan and save money over the entire course of the mortgage. Others may only be able to afford the lowest down payment possible and won’t be able to spend any additional money up front aside from the required closing costs. So what makes the Millennial down payment figures interesting?
If you are a first time home buyer and you have FICO scores that qualify you for the lowest down payment, with an FHA mortgage loan that down payment is only 3.5% of the adjusted value of the home.
Compare that with the Realtor.com numbers for down payments by Millennial house hunters-roughly 8.9%-and it’s easy to see that an FHA home loan is a serious option to think about if you need that considerably lower down payment.
FHA FICO score requirements (the FHA loan program rules, not the lender’s individual requirements which may be higher than the FHA minimums) state that borrowers with FICO scores 580 or higher qualify for the lowest down payment possible.
The same FHA minimum score requirements say that borrowers with FICO scores between 500 and 579 technically still qualify for an FHA mortgage but the down payment required in these cases would be 10%-not much higher than the average down payment reported for Millennial home buyers.
Again, lender standards will apply, but the baseline FHA loan requirements make home ownership-especially for a first home buy-well within the reach of many Boomers, GenXers, and Millennial home buyers.
Talk to a lender to see what down payment you may qualify for, how much you may have to save up for based on the price ranges of homes you want to review, and what it takes to get approved for an FHA mortgage loan.
What Is an FHA Loan?
Using an FHA Loan Calculator
Meeting FHA Loan Guidelines Improves Your Chances
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