Sioux Falls, SD
You may have heard you need 20 percent down to buy a home. And that's true if you want to avoid paying private mortgage insurance or you're buying a very expensive home.
But the fact is, most people can get into a home for five percent down or less, some even with no money down.
Ivy and Peter French just closed on their first home and it only cost them $45.
“We had to have $500 in earnest money and $45 for closing,” Ivy French said.
The Frenches started looking for a home after getting a small inheritance, but were pleasantly surprised they didn't have to tap into it.
“It's been really cool to have a lot of leftover funds to purchase stuff for the house. That was just crazy and it's nice because we really feel comfortable with our monthly payment because we have some cushion too. We have some time to figure out what we need to do to make this work," Ivy French said.
"Ivy and Peter did the right thing. They contacted the bank, they did their research, came into the bank to figure out what their options were so when they went out looking for a home they knew exactly pretty close to what they would need out of pocket the time they were done," First Bank & Trust Mortgage Loan Officer Brian Spaans said.
The reasons the Frenches were able to get into a home so cheaply is because they qualified for South Dakota Housing's first time homebuyer's assistance. And they also got a thousand dollar grant from their bank. Mortgage Banker Brian Spaans says there are plenty of ways for people to come up with the down payment.
"That doesn't necessarily have to be money you have today. We have a lot of people get gifts from family members, that's allowed. We have people who take out loans out of 401(k) s, that's allowed. We have people that maybe have a vehicle paid for, they want to take out loan on vehicle use for down payment, that's also allowed," Spaans said.
Conventional loans require five percent down, while FHA financing minimum is 3.5 percent down.
People who qualify for rural development or VA financing or first time buyers can qualify for zero percent down.
But people who put down less than 20 percent will pay for private mortgage insurance.
"That's true, but if you think of how long it might take the average person to save $20-40,000 that could be several years of going without owning a home," Spaans said.
Private Mortgage Insurance runs between $20 and $200 a month, depending on the size of your loan. The city of Sioux Falls community development also has a homebuyer's assistance program based on income. South Dakota Housing Sioux Falls Community Development