What is the usually percentage of the downpayment you must make on a house?

Question

I hear it's 20%, but is this always true? And if you don't have 20% are there others options to obtain the funds other than credit cards?Thank you for your time.

Answer 1

The "usual" down payment amount varies. It depends on
the TYPE of mortgage you are getting.

FHA requires 3% down. Conventional Mortgages can require anywhere for 5-20% down.

There are "some" mortgages that are Zero down.... But you
would STILL have "closing fees" .... And these types of
Mortgages are at a HIGHER interest rate.

Some banks and/or mortgage companies have down-payment assistance programs. There are also "grants"
available for down payments.

I suggest that you have a consultation with a reputable
bank, credit union, or mortgage company.

Ask to be pre-approved for a mortgage. And ask if you
qualify for ANY programs that would reduce or assist you
with your down payment or closing expense.

It is NOT a good idea to plan on using credit card funds for your down-payment. (Some loans require a certain amount
of "cash on hand" and most loans require a certain Credit
Score) .... Again .... Please get competent counsel before
you proceed.

Best Wishes!

Answer 2

20% is traditional from 30 years ago.

There are lots of 100% financing programs out there, even now. You just have to be able to document the income that you need to qualify ("full documentation")

One change that has happened in the last few months is that second mortgage lenders have abandoned the market for less than 10% equity. This means that except for VA loans (and subprime, where the rates are higher and the terms uglier) the only way to get away with less than 10% down payment is Private Mortgage Insurance (PMI)

(There are also locally based purchase assistance plans if you qualify and there's any money in the budget)


Here's an article I did on the current mortgage market a few days ago

http://www.danmelson.com/2007/10/full-circle-back-to-more-tradi.html

here's one with a much more detailed explanation of the need for PMI

http://www.danmelson.com/2007/09/100-financing-or-low-down-paym.html

Answer 3

20% is the amount to avoid private mortgage insurance which can add hundreds to your PITI payment .
Less than 20% , and in addition to the PMI , you will pay a higher interest rate on the loan , also adding $$$$$$$ to your payment .
Some people try piggybacking a 2nd loan for the 20% but then they have to scrounge garbage cans afterwards to survive because of the HUGE combined house loan payment .

Best to save until you have the 20% .

>

Answer 4

Down payment varies by loan type.

FHA loans require 3% down.

There is a first time homebuyer program in Arizona that requires NOTHING down and you get 5% at closing for prepaids and closing costs.NO prepayment penalty, and a competitive interest rate.

I would check you state for first time homebuyer programs.

These are your best bet if you don't have a lot of money to put down.

P.S. Here is the link for Arizona first time homebuyer's

http://www.welcome2arizona.com/home/first_time_homebuyer/first_time_homebuyer.php

Terry S.

http://www.Welcome2Arizona.com

Answer 5

It depends on your credit score. It varies between (usually) 7%-15%. The better your credit, the lower the downpayment.

Answer 6

A lot depends on the type of loan you use. FHA requires only around 3%, I bought mine with a conventional loan and only 5%.
Depends on the market (housing and money) and how creative.
By all means, shop around. The available savings is astronomical.
Good luck