For the last few years, buyers have been hard-pressed to land a mortgage if they didn’t have a 20 percent down payment, unless they turned to the Federal Housing Administration’s low down-payment loans.
But a growing number of banks are now offering loans with just 5 percent down, CNNMoney reports. For example, Bank of America, Wells Fargo, and TD Bank are among the banks reportedly offering mortgages with down payments as low as 5 percent.
TD Bank is offering a “Right Step” loan product that allows borrowers to get a loan with a 5 percent down payment while also allowing borrowers to get up to 2 percent of the sales price as a gift from a relative or third party. In actuality, then, borrowers would only need to come up with a 3 percent down payment themselves.
Banks that are offering 5-percent down payment loans, however, are requiring borrowers to purchase private mortgage insurance. Borrowers will have to keep PMI until they build up 20 percent equity in the home.
Source: “Banks Offering Mortgages with Only 5% Down Payments,” CNNMoney (Nov. 5, 2013)
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