Down Payment Under 20%

One of my favorite lenders, Jonathan King at Private Mortgage Advisors (PMA,) shares a quick and useful breakdown of ways to buy a new home without a 20% down payment…
As the market appears to shift (which seems evident by the number of offers we see on properties getting into escrow,) it would be a great time to remember about mortgage options that require less than 20%. The minimum down payment requirement is determined by loan amount and loan type (conforming or non conforming). For higher priced homes, minimum down payments offered by PMA are 10% up to a $2M purchase price. Above $2M, a larger down payment is required, generally 15% or more. For lower priced homes, minimum down payments can be 5% for a purchase price up to $715k which can be attractive to condo buyers in our area.
Back to higher priced homes… In a $1.5M purchase, the standard cash to close figure is approximately $407,000 which includes: Down payment of $300,000 (20%,) $15,000 in closing costs, and 12 months of reserves (approximately $92,000). With PMA, that figure is approximately $217,000 which includes: Down payment of $150,000 (10%,)$15,000 in closing costs, and 6
months of reserves (approximately$52,000).
At the end of the day, the myth is that you need to have 20% to put down to purchase a home.  The reality is that this isn’t the case.  Given the loan amount, as shown above, you can find loans that accept a lower down payment.  But beyond this, there are other ways to get down payment support – assistance from your employer, gifts from family, silent (or non-silent,) seconds.  There are a lot of ways to be creative in your financing and to get you into a home before you get that mythical 20% set aside.
The best thing to do is talk with a great mortgage officer, like Jonathan, and explore the options specific to your unique situation.
by Sally Slate Lee
IMPORTANT NOTE: I have not and will not verify or investigate the information supplied by third parties.

Work With Vincent

I love real estate. I strive to share this passion with my clients and will use my wealth of experience to help you realize your own dreams for your home, family and asset growth.
Contact Vincent
Follow Us