How Much Down Payment Do I Need

Typically the hardest part of buying a home is saving the down payment. Banks typically want an 80% Loan To Value ratio. What this means is that the maximum mortgage they will give is 80% of a homes value. Example – if a home is worth $400,000, they will loan a maximum of 80%, or $320,000. This leaves the buyer with needing an $80,000 down payment, plus closing costs. 

If you don’t have $80,000 cash, there are options. Banks will also give second mortgages for part or all of the 20% that still needs to be financed. However, since that second loan is risky for them since there may not be enough equity in the property to cover their exposure should a problem arise, they usually require Private Mortgage Insurance (PMI) for the amount borrowed on the second loan. The premium for PMI can be a significant amount.

There are options.

FHA government-insured loans can offer low down payment options while allowing for less-than-perfect credit. Down payments can be as little as 3%

Different mortgage companies offer different programs where you can buy with less than 20% down payment. Let your mortgage representative help you decide which program is best for you.

For Faster Service, PLEASE, always call our cell phones