I’ve seen some mis-information in the media lately about the required size of a down payment for a mortgage in today’s market, and the blog world is abuzz with misconceptions.
An individual may be required to put down 20 percent based on that person’s financial situation. But that is not an across-the-board requirement for all borrowers. A borrower who puts down less than 20 percent is required to obtain mortgage insurance in most cases. This can be avoided by attaining two loans – an 80% 1st position mortgage as well as a 2nd position or Home Equity Line of Credit. Occasionally you may see a program that offers “lender-paid PMI,” if you do, please realize that the lender MUST make that cost back by charging higher closing costs and/or a higher interest rate.
A borrower is required to make at least a 5 or 10 percent down payment. In a down-market that will probably be the case. If you see a 100% program available, be very careful. I always recommend getting a second quote from a different service provider.
As of the first of the year, FHA now requires a 3.5 percent down payment by borrowers. True. However, there are a variety of programs which can aid in down-payment assistance if you are a qualified buyer. It is also important to remember that your down-payment can be a “gift” from family or employer. FHA has increased their market share which has grown roughly tenfold in the past year to an estimated 30 percent of new mortgage originations. Also true. FHA is back and in a big way.
Down-payment assistance programs are no longer allowed. Correct. The traditional programs like AmeriDream and Nehemia are currently not accepted in conventional financing. However, state programs such as THDA offer options that come very close to Zero Down with seller help.
I always have the time to refer you to a qualified mortgage professional. Talk with me about your situation and I can refer you to a provider that will suit your needs well.
