The Imaginary Roadblock That Is Keeping Too Many People From Buying

How much money do you need to buy a house? It is one of the most common questions Bruce Byrwa at JC First Mortgage hears and it is also one that reveals how many people have built imaginary roadblocks in their heads about what homeownership actually requires.

Most people assume the number is large. A significant down payment. Years of savings. Perfect credit. A tax return that shows substantial income. The reality is considerably more accessible than that assumption and the gap between what people believe is required and what programs actually allow is keeping a lot of people on the sidelines who could be buying right now.

Zero Down and Very Little Down Programs Exist and Most People Do Not Know It

Bruce Byrwa has loan programs available with zero down payment requirements. Others require very little down. These are not obscure products or workarounds. They are legitimate loan programs designed for borrowers who are ready to own a home and can afford the monthly payment but have not accumulated a large down payment yet.

VA loans for eligible veterans and active duty service members offer zero down payment with no private mortgage insurance. USDA loans offer zero down in eligible rural and suburban areas. FHA loans require as little as 3.5 percent down. Down payment assistance programs available at the state and local level can cover some or all of the remaining requirement for qualifying buyers.

The specific program that fits depends on the borrower's situation, income, credit profile, and the location of the property being purchased. But the idea that a buyer needs 20 percent down before they can have a conversation about homeownership is simply not accurate and that misconception is costing potential buyers the time and equity they could be building right now.

For Self-Employed Borrowers Whose Tax Return Does Not Tell the Whole Story

For self-employed borrowers the down payment is often not the obstacle. The obstacle is the tax return. Business owners who work hard for every legitimate deduction they can take end up with a tax return that shows significantly less income than what they actually earn and bring home. Conventional mortgage underwriting uses that tax return number to determine qualifying income and the result is that financially capable self-employed buyers get declined or qualify for far less than their actual financial position supports.

Bank statement loan programs address this directly by using actual deposits into business or personal accounts over twelve to twenty-four months rather than what the tax return shows. The deposits reflect what the business actually produces. That is the income figure that gets used for qualification rather than the number that reflects a smart tax strategy.

Self-employed borrowers who have been told they cannot qualify because of what their tax return shows may find that a bank statement program produces a completely different and more accurate result.

The Right Move Is a Real Conversation

The only way to know what you actually qualify for is to sit down and go through the specific numbers. Income, credit, savings, the type of property being considered, and the location all factor into which programs are available and what they make possible.

Bruce Byrwa at JC First Mortgage works with buyers at every financial starting point to build a plan that gets them to homeownership based on their actual situation rather than a generic assumption about what it takes. Reach out to Bruce Byrwa to sit down, go through your finances, and find out what your path to buying a house actually looks like right now.

Sources

VA.gov
USDA.gov
HUD.gov
ConsumerFinancialProtectionBureau.gov
MortgageNewsDaily.com