After the housing bubble burst, buyers needed to come up with as much as 20% down or they had to turn to the Federal Housing Administration for a low down-payment loan. But now banks like TD Bank, Bank of America, and Wells Fargo are loosening the purse strings and offering loans with down payments that are as low as 5%. Over the past few years, the FHA has been raising premiums. This year, it started requiring borrowers to buy private mortgage insurance for the life of the loan; an expensive proposition that has sent many prospective borrowers looking elsewhere. While the loans were far too risky for private lenders to take on previously, rising home prices have made them less of a gamble. In addition, the banks think they can offer a better deal than FHA.
Banks offering mortgages with only 5% down payments
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