How Much Down Payment on a Home do You Need?

My friend did an 80/20 loan when she bought her house and didn’t have to put any money down, how can I get one of those? Two years ago in the mortgage lending world, there were many programs that allowed borrowers to max out the value of the property with low down payments. What lender’s found is that Real Estate, like any other investment, can be subject to fluctuations in value. If you loan someone 100% of the value of their property and that value drops, you could be left holding the bag.

Now, most lenders’ require some type of down payment, except for limited programs for Veteran’s and first time buyers. In most cases, you will need to have at least a modest (3.5%-5% down payment) in order to qualify to purchase a home. Credit scores have also become a more important part of the qualification process. If your credit score is below 680, you may need to put up to 20% down, unless the property will qualify for an FHA or First Time homebuyer’s program.

To find out all of your options, make sure that you are dealing with a mortgage banker. They will have access to more programs and be able to talk with you in detail about all of your options.

This blog is for informational purposes and is the opinion of the writer. In financial matters always solicit professional advice and legal counsel if necessary.