Figuring out how you'll finance your dream home is one of the initial steps to take before house hunting. Some first-time buyers may feel overwhelmed, as there are several options to pay for a property. If you want to buy a house, here are a few ways to make it happen.

How to Finance a Property

1. Get a Government Loan

There are federal government loans to help first-time and other home buyers. The Department of Veteran Affairs (VA), Federal Housing Administration (FHA), and the U.S. Department of Agriculture(USDA) offer lending options that help with down payments and provide money-saving tax credits and low interest rates.

The VA and USDA loan programs will typically waive down payment requirements for eligible applicants. At 3.5% of an approved home’s purchasing price, FHA loans make it easier for buyers to forego the standard 20% requirement by some lenders.

2. Use a Conventional Mortgage

Credit unions, banks, and other lenders have various requirements to support home shoppers. These financial institutions may get approval to put down as little as 3% on the house’s purchase price.

Private mortgage insurance is usually required if the down payment is less than 20%. Buyers with credit scores 620 and higher can also qualify for a lower-than-normal interest rate, reducing the overall financing costs.

3. Inquire About Seller Financing

If you plan to buy a house, you and the seller can exclude the lender and arrange a financing agreement yourselves. For example, you can make mortgage payments directly to the seller to lessen the closing costs. If you opt for this type of arrangement, ensure all the conditions are documented and that each party understands their respective loan terms.

If you want to know your financing options when buying a house, turn to Mark Pekarik, Realtor - AZ Housing Trends in Tempe. Mark has over 14 years of experience helping buyers find and close on a house in the Greater Phoenix area. He'll take the time to understand your financial needs so that he can find homes in your price range. Search for available properties online, or call (480) 205-0006 to schedule a free consultation.