More Home Buyers Using Low Down Payment Mortgage Loans


The major question which economists have to answer right now is why US consumers are not buying homes when mortgage rates are still close to their historic low while house prices are 21% lower than their normal level. The current situation is explained with the tighter credit standards and the inability of prospect home buyers to save a sufficient amount of money for making the required down payment. However, data recently revealed by Freddie Mac indicates that low down payment mortgages are readily available and widely used.

The data reveals that the mortgages with down payment lower than 10% grew over 4 times between 2009 and 2014. One in five home buyers using financing put less than 10% down on their conventional mortgage loan. Despite these promising figures, the demand for home loans with low down payment is still low.

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Why are not first-time home buyers taking advantage of the low down payment mortgages? One of the major reasons for this is that they are simply unaware of these opportunities which are available to them. A recent survey has shown that 39% of the people who are in their prime home buying age between 25 and 34 believe that all lenders require a minimum down payment of 15% of the purchase price of the residential property. Only 28% of the people in this group are optimistic that they can qualify for a home loan. Based on these findings, analysts have calculated that some 72% of the prospect first-time home buyers may be underestimating their chances for securing a mortgage and buying a house.

The other major factor for the low demand of mortgages with low down payment is that they are becoming ever more expensive. With the high mortgage insurance premiums charged throughout the whole term, the FHA loans requiring a minimum down payment of 3.5% have on average 44% higher monthly payment compared to their conventional counterparts.

As the demand for mortgage loans in general is getting lower, lenders are expected to loosen their standards and down payment requirements even further.



Christian Calvin mortgage Christian is a contributing writer for He is a graduate from the University of Tennessee with a degree in Communications and a concentration in Broadcasting. Christian has served as vice-president for a privately-held company for more than 20 years. Additionally, he has also applied his writing and business knowledge to various websites with a focus on business and sports news . . . both of which are passions. Christian enjoys playing golf and spending time with his family and friends.


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