Is a down payment necessary?

Question

if the real property is appraised for substantially more than the purchase price? Will the lender still require a 10% or 20% downpayment? The scenario I'm looking at is buying a property in foreclosure at a discount.

Answer 1

The appraised value can not count towards downpayment. The lender will consider the actual purchase price to be 100%. All financing calculations are done from this point.

Here is some additional info. Hope this helps.

Answer 2

No, down payments are not necessary. For well qualified buyers there are 100% financing options even for investment properties.

However almost all lenders (ALL that I know about) will use the lower of purchase price or appraised value when determining the value of the property for mortgage purposes.

Think about it. I sell you a house for $100K that you get an appraiser to "appraise" for $200k. You use the appraised value to get a loan for $160K and walk away. The lender has a 100K property and a 160k loan to satisfy.

Fewer games when you use the LOWER of the appraised value or contract sales price.

Answer 3

The amount of down payment is usually more tied to the qualifications of the buyer not the property. You can qualify for a 100% loan as long as the property appraises at the price you agree on. If it's higher, they won't give you more. The only exception is with private money, then you can get whatever you can negotiate.

Answer 4

It a lot depends on your credit and also what the lender offers. You need to check with various lenders to see if they even offer zero down.

Answer 5

Shop around for lenders who don't requier a down payment.

Answer 6

depends on your credit and what lender wants.