What's the typical down payment like on a condo?

Question

I've heard the 10% figure tossed around quite a bit. I'm realistically looking at something in the $150,000-$200,000 range, probably in Florida. Is 10% pretty much standard or does it vary? I have good credit by the way.

Answer 1

If your credit is decent, no down payment is generally a requirement anymore.

Anything less than 10% will cost you slightly more in interest rate or fees.

With good credit, and a 10% down payment, mortgage insurance is probably cheaper than doing an 80% first and 10% second mortgage to avoid the MI.

Any loan originated in 2007, the mortgage insurance will be tax-deductible.

With perfect credit, your mortgage insurance shouldn't cost you more than .37%. A normal 2nd mortgage will be at 1-2% higher than your fixed rate first mortgage (and there's almost ZERO savings on ARMs right now, so skip them). MI can be dropped in a couple years, as soon as your value appreciates or you pay down the loan enough to get below 80% of market value. High rate 2nds don't drop in rate when your value goes up.

But, it depends on the 2nd you can get, what closing costs if any you'd pay for the 2nd (some lenders will pay your costs on a 2nd.)

Get at least 3-4 quotes, couple from brokers, at least one from a bank (who might have cheap, no closing cost 2nds more available). They should be able to show you clearly, on paper, whether paying more down makes sense, whether an 80/10 or 80/15 or 90% insured makes sense, etc...

Answer 2

This is a great question and the answer varies greatly depending on what you can qualify for.

Historically, you had to have at least 20% down to avoid paying PMI insurance or Private Mortgage Insurance. PMI insurance is a default insurance, charged if your FIRST LIEN mortgage is 80.01% or higher (of the value of the home). The reason this is charged is because there is a high rate of default on mortgages that are over 80% of the value of the home.

However, lenders have figured out a way around this rule, by seperating the one loan into two. Since they only look at whatever loan is in first lien position, now you can finance 100% of the value of a home, on two loans, one at 80% of the value and the second loan at 20% of the value. Since the first loan is at or below 80%, there is no PMI insurance.

There are many variations on this structure, like an 80-10-10 (putting down 10%) or an 80-15-5 (putting down 5%).

Hope this helps!

Answer 3

I agree that Justin had a pretty good answer. If you have good credit, you can get in for very little money.

However, also consider how many years you might want to sell the property. Resale prices on Florida condos are getting absolutely hammered right now. Good if you can get a good deal as a buyer, but horrible if you want to be a seller not too far down the road.

Check to see what properties are being sold for at auctions. Your offer should be about the same or even lower than those offers. Do your homework carefully. I know this is somewhat off-topic from what you asked, but I'm just trying to help you make a good decision.

Answer 4

A typical down payment is 20%. Anything less, and you will be required to have PMI insurance, which can cost an arm and a leg. You can also let yourself in for financial problems if you put down less than 20% and the market falls, or you lose your job or need to sell for some other reason.

Answer 5

Same as detached houses, and the down payments vary all over the lot: it is mostly a matter of what the lender will sit still for. Talk to your favorite banker, and also look at www.mlcc.com, which is the real estate lending arm of Merrill Lynch.

Answer 6

20% is extraordinarily common at the same time as making a purchase order. once you should borrower better than 80%, you'll both ought to pay loan coverage, or take out a 2d loan ( a house fairness Line of credit, or a collection price loan). loan coverage is now tax deductible...basically FYI

Answer 7

There are no money down mortgages, and 5% down mortgages, as well as 80/15's ( 80% first mortgage and 15% second mortgage) (80/15's are good because you wont need to get mortgage insurance)
Talk to a mortgage broker. He can go over the options with you.

Answer 8

nowadays 15 percent is more like it and mortgage rates are higher than they have been in 3 years. i don't know what part of florida you're looking at but if it's within 10 miles of a beach try $400,000.00

Answer 9

I believe it depends on how good your credit is. The more you put down the better your payments will be.

Answer 10

Patrick's right. And, I would add, do NOT go into an adjustable rate mortgage (ARM). That route is just too risky with rates on the rise.