Down payment

What is the standard down payment on a house? How did you come up with it? Right now we have a good chunk in the bank, but I know it isn't enough. Hubby thinks it is plenty... If a house costs 299,000 dollars, how much would we have to put down? I am going to have a lot of questions, some may be pretty dumb. But I am so new to buying a house... Thanks.

Re: Down payment

Hi! Not dumb questions at all.

Your best bet is probably to talk to a mortgage professional, who can fill you in on the various types of loan products out there, and what might work best for you. But I can give you a general overview:

1) If you get an FHA loan (which is a government-backed loan), you can put as little as 3.5% down. FHA tends to have slightly more lenient requirements when it comes to credit, debt-to-income ratio, etc., and those loans are very common these days. You will have to pay mortgage insurance if you go the FHA route, which adds to the monthly payment. (There are also VA loans, if you would qualify, that require a low minimum down payment, or no down payment if you are under a certain price point).

2) If you go for a conventional mortgage, people usually put at least 10% down, although I've heard of people getting conventional loans with smaller down payments. 10% is not the required minimum (contrary to popular belief), although those with a smaller down payment don't qualify for the best interest rates. HOWEVER, if you put less than 20% down, you will need to pay private mortgage insurance. For that reason, many people who are going the conventional route do put 20% down.

But it all depends on how much cash you have, what monthly payment you can afford, etc. Keep in mind that you will also need cash for closing costs (typically 4%-6% of sales price) and that banks will not want you to deplete all of your cash with your down payment and closing costs. They want you to have some cash "reserves."

If you need the names of some good mortgage people, let me know, and I can send you some recommendations.

Also, if you need some house hunting help, let me know. You can check out my bio in the business directory on this site!

Message edited 5/24/2011 11:57:30 PM.

Re: Down payment

Depends on the kind of loan you are doing...VA loans require no down payment, FHA I believe are 3% down and all else are any where between 10-20 % down. My suggestion is call a mortgage co (We used Gerard at continental home loans and he is AMAZING AT answering questions). I spoke to Gerard and he broke it down for me and told me what we would need, and weather we had enough with what we had. FM me if you want his info. Also remember closing cost are quite a chunk of change as well.

Re: Down payment

If you don't put 20% down don't you have to pay for PMI?

That seems to be a waste of money so we did 20%

Re: Down payment

To avoid PMI fees on your mortgage 20% down payment is required. So if the house is $299,000 your 20% down payment will be $59,800. Just so you know you don't have to put 20% its just to avoid PMI.

Don't forget closing costs, thats about $10,00 to $15,000 (depending on the taxes).

Good Luck!!

Re: Down payment

3.5% down of 299,000 is $10,465 then you'll need money for closing cost even if you are doing a Seller's Concession.

My husband and I just went through this process we are closing on June 23rd!!!

Good luck! and have a lot of patience!

Message edited 5/25/2011 12:55:59 PM.

Re: Down payment

20% is the minumum you should put down to avoid PMI (Private Mortgage Insurance). The more $$ you can put down, the lower your overall mortgage and monthly payment...

Source of Funds to buy Home (LIF POLL)

Re: Down payment

We put 20% down and had additional money for closing costs, because we didn't want to pay PMI.

We saved it all.

Re: Down payment

You also need money on hand in case of emergencies and to be able to afford the monthly payment PLUS homeowners insurance PLUS taxes. (In addition to the rest of the expenses that come with owning a home.)


That said we decided it would be in our best interest to put down 20%.

Message edited 5/25/2011 5:35:45 PM.