A mortgage document and house keys.

New mortgage programs offer alternatives to hefty down payments for homebuyers. (Getty Images)

If you’re a first-time buyer, making the leap to homeownership in 2017 could be an affordable dream come true. The economy is performing at its best levels since 2009 with gains in wages, low unemployment and the highest levels of job growth on record. And although home prices have risen as the economy has grown and housing demand has increased, new mortgage programs specifically for first-time buyers are offering low mortgage rates, low down payments, low closing costs and other opportunities to put homeownership within reach for those looking to buy now.

One key factor: The days of the mandatory 20 percent down payment are over. For those who have smaller amounts of money saved or who carry sizable student loan debt, the best news is that today’s first-time buyer affordability programs allow qualified buyers to put as little as 3 percent down, thereby removing the biggest obstacle to homeownership: amassing a substantial chunk of cash. Lower down payment requirements, coupled with low mortgage rates, allow for more flexibility in qualifying for a loan and increase the opportunities for finding a home that truly meets your needs.

[Read: Credit, Mortgages and Your Ability to Buy a Home: It's Doesn't Have to Be Scary.]

A Win-Win Situation

If you think there must be some catch to affordability programs that feature a low rate and low down payment requirements, think again. With nearly 63 percent of millennials considering purchasing a home within the next two years, lenders know that such programs not only help eliminate barriers to qualifying for a loan and purchasing a home, they provide opportunities to form strong relationships with homebuyers from the very start. Relationships are at the core of good banking and lending practices, and the most responsive lenders strive to create programs to serve their communities’ needs and strengthen those bonds. These programs make sense for lenders as well as consumers.

Furthermore, since first-time buyers represent the fastest growing segment of the mortgage business, many lenders are creating programs that consider today’s social and economic realities, as well. For example, Fannie Mae has its HomeReady mortgage program for first-time buyers and current homeowners, which not only provides low down payment terms, but also the option to use relatives' or roommates' income to help qualify for the loan. Today, this shift to mortgage sharing is not at all unusual. According to TD Bank’s Mortgage Service Index, almost a quarter of Americans share a mortgage with someone other than a spouse. And when it comes to millennials, this number nearly doubles, with 42 percent sharing mortgages.

[Read: How Homebuyers Can Receive Down Payment Assistance.]

Many Choices to Fit Buyer Needs

The wide range of mortgage affordability programs include 30-year or 15-year fixed-rate conventional mortgages, adjustable mortgages and government loans.

In the end, mortgage affordability programs are all about being responsive to the needs of the consumer, and creating options that remove what seem like insurmountable barriers to owning that first home. By taking advantage of today’s unique mortgage affordability programs, qualified first-time buyers can reach the goal of homeownership, and reap benefits and savings in the process.

How to Get Started

Step one for potential first-time buyers considering low down payment options is to find a trusted lender. Buyers should meet with a lender at the start of their home search to get a clear picture of their options and ask questions. A lender's expertise is in finding a mortgage that fits the buyer's needs. A reliable lender you feel comfortable with will be a valued partner throughout the entire purchase process. The more you can share with your lender about your individual financial situation, the better equipped your lender will be to find you a mortgage.

It’s important to be transparent when meeting with a lender for the first time. Opening a dialogue with your lender early in the process will help you outline exactly what is needed for mortgage approval, and help you avoid any roadblocks. Ensure you are upfront with your lender and don’t omit anything that can derail the process down the line, such as existing loans in your name. If there are problems with your finanical history, like poor credit, don’t ignore them. If you're open with your lender about your financial standing, the lender will be open with you about what options suit you best.

[See: The Best Places to Live in the U.S. in 2017.]

From the appraisal to the closing table, there are many steps, options and terms that can be overwhelming when you start looking for a loan. Lenders can also provide you with educational tools that will help simplify the mortgage process. These resources can guide buyers through the overall homebuying process, loan down payment options and what you’ll need to get approved. For example, many banks offer HomeReady Mortgage borrowers an interactive first-time home buyer seminar that explains the mortgage process. Lenders understand that their buyers are often making one of the largest purchases of their lifetime, so they’ll make sure you have the proper tools and guidance to nail it.

Tags: real estate, housing market, housing, home prices, Fannie Mae, mortgages


Ryan Bailey is executive vice president, retail lending director for TD Bank. Based in Mount Laurel, New Jersey, Ryan has nationwide accountability for all aspects of the lending business, including product and P&L management, and leading the national sales team, capital and secondary markets groups. Ryan is responsible for significantly growing TD Bank's mortgage business through a combination of technological improvements and expanding the sales force, while maintaining TD Bank's risk appetite. With over 15 years of banking and management experience, Ryan joined TD Bank as a senior executive in March 2010, handling all retail deposit products, including checking, savings and money market accounts, term deposits, debit cards, stored value cards, and unsecured lines/loans, auto, boat and RV. In addition, Ryan managed the various legal, regulatory and public policy aspects of the deposits and personal lending business. Ryan graduated from Western Michigan University, Haworth College of Business, where he earned his BBA in Finance and MBA in Business/Managerial Economics.

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