How much down payment is needed to buy a home?

Real Estate Agent with The Andrew Lamb Team 01900103


How much down payment is needed to buy a home? Most of the zero down payment loans are long gone but there are programs that I have access to that will allow very little down payment.
In regard to 0 down payment programs, the best one available is the V/A program, which offers 0 down and where the seller can pay all the closing costs. Nice, but you need to be in the service or a Veteran to qualify.
FHA requires only 3.50% down payment, and the seller can pay all the closing costs, if willing. And the down payment can even be gifted by a relative. FHA also has a down payment assistance program called CHDAP for first time home buyers, which is considered a 2nd mortgage with a deferred payment into the future that will lend you 3% toward your down payment and closing costs. Minimum investment is only 1% from the borrower. A good program, but it has income limits and you need to attend a home buyers class to qualify. This program is more time consuming, so allow 45-60 day escrows once in contract.
Conventional loans also have 3-5% down payment programs. These programs are more restrictive when it comes to qualifying but are a great option if you have the credit score and income to qualify.
All of the above have pros and cons, so be informed so you can make the right choice of financing for your needs.
As I look back on 2011, with home prices and interest rates down, just about every new homeowner I helped this year ended up buying a home with a house payment that was less than what they were paying for rent. If you're renting or know someone who is, wouldn't you rather own a home with a fixed rate payment that is possibly less than renting? If you haven't noticed, the rental market is very strong right now and rents are on the rise. Call me and let's discuss your buying opportunities in 2012. These low rates and home values won't be around forever.
With that said, have a Merry Christmas, as I hope your shopping is done and you can hopefully relax a bit and enjoy the season.
The above is from Barry Harris, a friend in the mortgage business. You can contact him at American Capital Mortgage - 916-357-6620. If you or a friend is looking to buy a home, sell a home or invest in real estate, give me a call to discuss your options and receive a free list of the best bank owned deals available in your area.


Comments (2)

Larry Bettag
Cherry Creek Mortgage Illinois Residential Mortgage License LMB #0005759 Cherry Creek Mortgage NMLS #: 3001 - Saint Charles, IL
Vice-President of National Production

You are so on with this post.  Frankly the best zero down is VA.  AFter that, stick with the 3.5% FHA or the $100 down FHA!

Dec 22, 2011 04:45 PM
Chris Jones
Blueleaf Lending - Chicago, IL
Sr. Mortgage Planner

Good stuff.  va and fha are the preferred outlets for lower down payment borrowers.  But don't forget about USDA loans.  Of course there are geographic restrictions and funding limitations, but you'd be surprised on how many homes 'may' be in a target area.  Here's the link to USDA and how it works



Dec 22, 2011 04:56 PM