Downpayment Information
Downpayment rules can be complicated and they can also change quickly.Here are some basics, but please check with your lender for specifics and updates. There aredifferent minimums for downpayment requirments. One minimum, of course is a bare bones, get you into a house type of situation. The second minimum answers the question “How do I avoid paying for private mortgage insurance?”.
First let’s address the minimum to get you into a house. There are many type of loans, a few broad categories, and hundreds of variations. Different types of loan programs require different downpayments. The thing to remember about down payments for most mortgages is that your downpayment money must be “sourced” and “seasoned”. That means that the lender needs to verify where your funds came from and to see it recorded in an institution for at least three months. Three months of bank statements will serve this purpose. If, however, you have $20,000 in cash stashed in a coffee can in the garage, you cannot use it for a down payment. So, every rule has exceptions, right? In some very limited special cases there may be exceptions. Check with your lender.
Here are some requirements for some broad categories of loans. These are subject to change. In some cases the titles are links to the official homepages.
Conventional:
Fannie Mae and Freddie Mac and Federal loan programs. Each requires 5% down and sometimes they carry first time homebuyer programs that only require 3% down. The loan limits for these programs have recently been raised.
FHA:
Requires 3% down payment unless you are using one of the Gift programs. (Still 3% if it is a gift) Closing cost may be paid by the seller and/or part of them may be financed in the loan. The LTV can actually go as high as 97.75%
VA:
Zero down payment for Veterans,closing costs can be paid by the seller.
Non-Conforming:
100% financing is available in the market. Some lenders have100% plus financing. Rates for these loansare higher because the risk is higher, even with a “good” credit score.
