What is a Micromortgage?

If you’re looking for a home in North Florida, you may have heard of micromortgages – but what are they, and is it possible that you could qualify for one?

Here’s what you need to know.

The Homeownership Council of America is working on a new project: The micromortgage. A micromortgage is a home loan for $100,000 or less. Although it’s not always easy to find homes at that price point, it’s still possible – even around Lake City.

The HCA wants to extend the program to markets all over the country, but the infrastructure isn’t yet in place. Even then, not all lenders will offer micromortgages, but those who do typically finance them at 100 percent. That means there’s no down payment required, which may make it easier for first-time homebuyers to break into the market.

What About Private Mortgage Insurance?

Micromortgages don’t require you to buy private mortgage insurance, or PMI. That’s a stark contrast to most conventional mortgages, which require borrowers to pay a premium for not having a 20 percent down payment. Usually, you only find zero-down-payment loans through the USDA and the VA

Related: VA loan guide

What Kind of Credit Do You Need to Get a Micromortgage?

Some lenders will allow you to qualify for a micromortgage using “alternative credit” if your score is too low to qualify for a conventional mortgage (or if you don’t have any credit history). Alternative credit can include things like your rental history or any monthly installment payments you’ve been making over the past 12 months.

What Are Interest Rates Like on Micromortgages?

Interest rates on micromortgages are slightly higher than they are on conventional loans. You can work with your lender to see what interest rate you qualify for – and make a decision on whether it’s best to pay a little more in interest than it is to continue to rent a home.

Are You Buying a Home or Land for Sale in Lake City?

If you’re moving to Lake City, we can help you find the perfect place to live. Call us at 386-243-0124 to tell us what you want from your home and we will begin searching right away.

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