There are many ways you can make buying a house more affordable, from temporary interest rate buydowns to down payment assistance and more.
A home is one of the biggest investments you’ll make in your lifetime — but that doesn’t mean it can’t be affordable. There are a variety of things you can do to save on costs and make it easier to dive into homeownership.
No-Down-Payment Mortgage Programs
One way to save on your mortgage upfront is to take advantage of a no-down-payment home loan. Waterstone Mortgage offers a variety of mortgage programs that don’t require a down payment, including:
- Powerhouse 100 — No down payment required, no income limits, and no first-time homebuyer requirement
- VA Loan — No down payment required for veterans, active-duty military members, and some surviving spouses
- USDA Loan — No down payment required for homebuyers in rural and some suburban areas
- Wealth Building Loan — Applies more of your payment to principal and less to interest each month
Down Payment Assistance
You can also use a state or national down payment assistance (DPA) program to save on your new home upfront.
Most states offer DPA programs that provide anywhere from 3-10% in assistance, which homebuyers can use for the down payment and/or closing costs.
Or, you may consider a national DPA program, such as:
- National Homebuyers Fund or Chenoa Fund — Up to 5% in assistance for FHA loans
- Freddie Mac BorrowSmart Access℠ — $3,000 in assistance available in select areas
Temporary Interest Rate Buydown
The interest rate you lock in will impact your monthly mortgage payment. Did you know you could temporarily reduce your interest rate for the first 1-3 years of your loan?
Temporary buydowns are typically offered in a 3-2-1, 2-1, or 1-0 format.
Here’s how it works (for a 3-2-1 buydown):
- Year 1: 3% reduction in interest rate
- Year 2: 2% reduction in interest rate
- Year 3: 1% reduction in interest rate
- Year 4: Interest rate returns to the original, locked-in rate
The same pattern applies for a 2-1 (reduced by 2% in year one, then 1% in year two) and 1-0 (reduced by 1% in year one) buydowns.
The seller often covers the cost of a temporary buydown, but Waterstone Mortgage also offers a lender-paid* 1-0 buydown option.
Ready to start your journey to affordable homeownership? Find a loan originator in your area today.
*Lender-paid temporary buydown financing option is only available for a primary residence, purchase transactions. Available with conventional, FHA, USDA, and VA loans — ask your mortgage professional for more details. Lender-paid temporary buydown available on loans locked on or after 5/6/24.
