How much down payment is needed for new home purchase?

Question

My wife and I are on a serious credit repair mission to eventually purchase a new home. The home that we live in now we will have to rent it out versus selling. There are homes in my area that have been on the market for appx 2 years and still sitting. If we rent we wont have to wait more than a couple of months max.
Now my question is how much of a down payment will I need for my next purchase. The home we are looking at is appx $250,000. How much will I need to bring to the table as a down payment. Also what are my options for any down payment alternatives. Someone told me I needed 20% down and I almost passed out. Our scores are horrilbe right now but we are waiting until they reach the mid-high 600's Please help..........Thanx in advance.....

Answer 1

You have a few options.

You can opt to do a 2nd mortgage for the 20%.

You can take out a home equity line of credit on your existing home to use as a downpayment on the other home.

You can get a 100% loan, but pay for PMI insurance (private mortgage insurance) until your new home has enough equity in it to make your mortgage balance only 80% the new value of the home (i.e. when it is valued at approx. $315,000)

You still need something for closing costs, another user on here stated that if you do not have the money for closing costs, you can raise the sale price on the home you want to buy to about $260,000, and have the closing costs included in your financing.

What you want to do is talk to a loan officer or a mortgage broker to discuss this with you, they are more than willing to inform you of your options.

Answer 2

Depends on what type of loan you go with. Call your bank & apply for a loan. Ask what you need to put down. If the sellers will accept FHA then the minimum down could be as low as 3%. However, the bank may want more due to credit score etc. Many homes are on the market for so long because it's a buyers market & there are more homes to choose from. Rates are ok right now but the selling prices are really priced to sell. As for bringing money to the table, it depends...there are a lot of fees involved in mortgage loans so have your bank run an application & they will send you a Good Faith Estimate of the fees that are due at closing. Good luck

Answer 3

With that type of loan, you'd be better off waiting for a longer period of time to get your credit score over 700. Seriously. This is going to vastly affect your rate (points), and if you can hold out, you'll be in a better situation as far as interest and PMI are concerned. Don't pay PMI if you don't have to...this is what you'll need to pay unless you have the downpayment the lender is looking for (it could be less than 20%) and sufficient credit/income to prove you can pay. After you've reached that amount of equity, the PMI falls off, but it can take years. You can probably get a FHA loan in the 600's with less than 20% down, but some lenders will still want to see a pretty good downpayment, like I said, especially for mortgage that big.

Answer 4

well, when you boil it all down, theres gonna be a bank somewhere thats gonna give you a loan, its just a matter of setting things up in a manner you're comfortable with. i know a guy who makes almost nothing, just got divorced, and his credit is terrible, and he found a few banks that told him they'd get him set up with a mortgage with NO down payment. i bout a house last year, and i didnt have the 10% or 20% that most banks like. so, in the mean time, i pay PMI (private mortgage insurance). its only like $25 a month or so, so its not a deal breaker by any means.

see if you can a payment every 2 weeks, thats what i've got. that way your interest stays down. on the first day of the mortgage cycle there might be a dollar of interest, on day 2 you're gonna pay the interest of day 2 AND pay interest on day 1's interest.... by the time you reach day 30, the number is astronomical. BUT, if you were to set it up so that you pay every 2 weeks, you're stopping the interest from climbing so high. my 30 year mortgage is actually only gonna be 23 years because i've set it up that way.

DONT LOSE HOPE. anyone can make it happen, you just need to want it bad enough, and even if you get a mortgage that isnt ideal, you can always refinance later on. good luck!

Answer 5

The down payment you will be required to make will depend on many different variables. Provided you meet all of the qualifying criteria, if your score is in the mid-high 600s, you can get into a house with 0 down. Your best bet is to speak with a lender before you go home shopping. They will be able to let you know what you can get approved for, and what type of down payment you'll be looking at.

Answer 6

The standard down payment is 20%. If you have good credit and a decent income you might be able to qualify for a 10% down loan.

However there are some Federal Housing Authority (FHA) loans available to first time home buyers where you can put as little as 1% down if you qualify. You will have to pay Private Mortgage Insurance (PMI) but if you can't afford it otherwise its worth it.

Talk to local mortgage broker. They will walk you through your options free of charge in the hopes you will come back to him for future business.

Answer 7

You can get a 0% down, but will pay a higher interest rate. Best to put at least 20% down, especially if you are selling your house.

You can make an offer on a house on a continguency, where it is continguent on selling your house, and use the profit for a down payment.

Get your credit up FIRST.

REPEAT, GET YOUR CREDIT SCORE UP FIRST.

Answer 8

You are not required to have 20% down on the purchase of a house, but if you don't, the mortgage lender will require you to pay "PMI" (primary mortgage insurance). PMI is a total crock of crap designed to make people who don't have big bucks pay up the *** even more. My suggestion if you do not have 20% down would be to speak to several mortgage lenders and find one that will give you two mortgages in order to make it appear that you had the 20% down instead of paying one big mortgage plus PMI. This is what I did with my first home, and it worked out well.

Answer 9

i have been looking into the downpayment stuff myself, and in texas its minimum of 10%, but if you put 20% then you dont have to pay the mortgage insurance which i think is about $70 a month on a property of that value.

Check out this site, it may prove helpful for you:

http://www.forsalebyowner.com/java/MortgageQualifier.html

I'm not sure but this could be a rule for the whole of the US.

Good Luck. x x

Answer 10

the better credit score- better loan terms.
if your credit will be in the middle of 600- you can buy a house with 0% down payment or as low as 3% down payment.
the worse credit score- more down payment and interest rate higher.