Profile picture for KristinSantos

Does a new home buyer need a large down payment?

We are first time buyers looking for a mortgage to be around 1000-1300 and would only have between 5-10,000 for a down payment. Is this possible? We are trying to figure out if it is worth while or even possible to buy instead of rent.
  • August 05 2013 - Roxborough
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Answers (30)

Not necessarily. FHA loans begin with 3.5% down and most conventional loans require 5%, and possibly 3% option til mid November. Let me know if I can help!
  • October 22 2013
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Everyone's scenario is different and the requirements (down payment) is based on these factors. however, as other have mentioned there is FHA as low as 3.5% and there is even down payment assistance programs.

Talk to a few lenders and let them run your scenario. From there they can explain your options and help you create a plan that will get you on track to qualifying.

Have an amazing day!
  • October 21 2013
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Profile picture for Mike Bottaro
Kristin,

Sure is possible :))

Here are the minimum requirements for a down payment:

1- FHA - 3.5% of the sale price
2- Conventional - 3%-5% of the sale price depending upon which program is offer or you qualify for
3-USDA - 0% down (property must be in an area which qualifies - typically is a more rural area which is in the progress of being built up)

As for your payment, that would vary based on taxes/home owners insurance however $1,300 for a monthly payment is realistic if you plan on being in the $140-$180k price range.
  • October 21 2013
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Good compensating factors are taking into affect when getting approved for a loan. Like a good job, etc. There are several programs for the first time home buyers that you really do not need much for a down. Take the USDA for instance, ZERO money down, NO MPI (mortgage insurance payment) and on top of this, closing costs of a maximum of 6% can be negotiated for the seller to pay. Talk to a professional in your area and see what programs are available for you. In my area BUYERS buying USDA, come in with NO MORE than $1,000.00 out of pocket expenses.
You can always put your down payment and qualify for a FHA which required 3.5% of the purchase price BUT keep in mind that every $10,000.00 you put down in a home, SAVES you about $50.00  a month. It is better to put the minimum required down; have your closing cost paid by the seller and KEEP your money for any emergencies. 

I think if you qualify for a loan, you should BUY and stop paying someone elses mortgage. 
  • October 15 2013
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Best to call a loan officer in your local area.
  • October 15 2013
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There are a lot of banks that only require a down payment of 3% in our area.  I would recommend getting with a lender to find out if you qualify for that type of program.  I know here in Wisconsin there are also down payment assistant programs that often give up to $8000 for a down payment if you are considered lower income.  Your local lender should know about any of these types of programs or other city/local grants that are available to help you out.  Some lenders even require 0% down if you work in the healthcare field. 
  • October 15 2013
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Some cities and communities will offer down payment assistance programs for 1st time home buyers and FHA loans are 3.5 % down of the sales price- speak to a local Realtor who will be familiar with any programs for 1st time buyers.

Good luck!
  • October 15 2013
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Call a loan officer based in Philadelphia.
  • October 14 2013
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Profile picture for SoCal Engr
It's possible, but it may not be advisable.
  • October 05 2013
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The two federal agencies that participate in real estate financing are the Federal Housing Adminestration (FHA) and the Veterans Administration (VA). Together they make it possible for people to buy homes they would never be able to purchase without government involvement. Check with your prefered lender, you may qualify for an (FHA) loan with low down payment or (VA) loan with no down payment.

Adel Lotfy
Broker Associate
DRE Broker License # 0110445
  • October 05 2013
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Not necessarily. The down payment will depend on the total purchase amount and the loan program. There are programs that will only require at least 3.5% down payment.
Aside from down payment, lenders will look at your income, credit rating. Consult with a lender so you will be guided accordingly.
  • October 05 2013
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Profile picture for Ashley Pirko
It's absolutely possible! You need to get with a local loan officer who will steer you in the right direction of what loan product works for you.  FHA Loans and First Time Home Buyer programs are out there everywhere for next to nothing down. Good Luck!
  • October 03 2013
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Sounds like you can roughly afford something in the $130k to $180k range. 

Time to talk to a local loan officer  (if you can buy property in your market for that price?) 
  • October 01 2013
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Profile picture for John Reeves1
Make larger down payments to avoid fees.  If you are torn between two homes, and the list price is close, consider if it falls within a price you can cover with a 20%-plus down payment. 
J. Reeves
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  • October 01 2013
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A new home owner does not need a large down payment to purchase a home.  The least amount of down payment with a FHA loan is 3.5 %.  Veteran and USDA loan require 0 down.
  • September 26 2013
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The FIRST thing to always do is talk to a local lender that has access to all programs available in your area. Many local banks offer  "portfolio" programs with as little as $500. down and no mortgage insurance as well as grant money and "my community" mortgages in some cases. USDA is always a great option for no money down in areas where it is available. Many lenders offer no mortgage insurance programs with a slightly higher rate and while rates are still historically low you could save  quite a bit of money. Many special programs have minimum credit score requirements and/or  income limits,etc.  so make sure you speak with a lender. 
  • September 25 2013
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Profile picture for Mike Bottaro
Kristin,

The best and easiest way to do the math on what you can afford with the least money down is to budget for about 3.5% of the purchase price using an FHA loan.  So if you are buying a $200,000 house (assuming the seller will pay your closing costs) you would need $7,000 as a down payment and I usually budget for an extra $1,000 as a cushion (home inspections, etc.) for a total of $8,000 needed to close on a $200,000 home. 

Also as someone else mentioned below, USDA loan is a program which requires no money down; 100% financing.  However often on new construction it is more difficult to negotiate the seller/builder paying your closing costs.  Closing costs often exceed the minimum down payment FHA requires.  FHA with 3.5% down would most likely be your best bet.

Let me know if you have any other questions.
  • September 24 2013
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Profile picture for Real Agent Amy
Talk to a mortgage lender to see what loans you can qualify for and how much down payment you would need for the different types of loans. A 20% down can save you in private mortgage insurance but there are lower down payments to allow you to buy.
  • August 22 2013
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It also may be worth exploring USDA Guaranteed housing loan.

It does have geographic and income limitations, but, may possibly work for you.

Allows 100% financing, 30 year term, and no limit on seller paid closing costs.
  • August 17 2013
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Profile picture for John Reeves1

Make larger down payments to avoid fees.  There is a reason that 28.8% of Americans are considering renting over buying this year. They are unable to cover the 22% down payment needed to avoid mortgage insurance and additional fees. 



With tighter restrictions around lending money, being unable to cover this level of down payment can result in the need to purchase mortgage insurance.  In the past few years, government-insured mortgages fees have rose, costing home buyers as much as 10% of the home price on a 30-year mortgage.



J. Reeves

CEO and Founder

Reef Point Realty & Construction

[removed by Zillow Moderator]
  • August 16 2013
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Profile picture for pmzsteve
Typically 3.5% is all you need. However if you can, its best to put 5% down and go with a conventional loan. The new Mortgage insurance requirements on FHA loans are a killer.
  • August 12 2013
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Kristin,

You are certainly in the ballpark, and could expect to buy up to $150k with $7500 down. That would be 5%, and allow you loan choices of either FHA financing or conventional financing with mortgage insurance.

Usually the payment would be a bit lower on the conventional loan.

Your credit scores would need to be 660 or higher.

Good luck!
  • August 12 2013
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KristinSantos-

Good Evening.

Solid question, best answered by a local lender in your city/start.

Have a BEAUTIFUL night.

-Shawn I. Rogers, REALTOR, AZ.
  • August 12 2013
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Your down payment amount seems sufficient enough, especially as a first-time home-buyer.  You may be surprised to learn that your down payment does not need to be exorbitant. Best wishes
  • August 06 2013
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That should be enough money depending on the purchase price of the home and area.  The best bet for you could be FHA, as they only require 2.5% down payment, and the seller can provide up to 6% of the purchase price in assistance towards closing costs!

Contact me to chat more!

John Cushma
NMLS #847424
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  • August 06 2013
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Kristen,

I've help many buyers who had less cash available buy homes.  If you are planning on being in the property at least 4-5 years then buying makes sense.  And right now is a great time to buy with both mortgage rates and homes prices low.  My office is located on Ridge Ave in Roxborough, feel free to stop in to discuss your situation.

regards,
Dennis
  • August 06 2013
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Another thing that I should mention is that you can possibly get a community grant for you down payment. A community grant can cover 3% of a down payment. So if you seek out an FHA loan with a 3.5% down payment, your left with only .5% down payment, since a community grant can cover 3% of it.

Just thought I should add that as well!
  • August 05 2013
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You can buy FHA with 3.5% down. You can also get the seller to cover up to 6% in seller concessions, which should cover closing costs (depending on where you are located). What you are talking about is definitelypossible, talk to a lender and get Pre Approved!
  • August 05 2013
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If you are a veteran you can get a VA loan with zero percent down. Also If you live in Ma you could do a MA housing loan for 3percent down. Call a local bank or mortgage broker and see what is available.
  • August 05 2013
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Well if you are a first-time home buyer I would suggest looking into getting an FHA loan. This loan is designed to help out first-time home buyers. This is because FHA loans usually means low down payments, low closing costs, and easy credit qualifying. Also, an FHA loan downpayment can be as low as 3.5% of the purchase price, and most of your closing costs and fees can be included in the loan as well.

I hope this helps! If you have any other questions about lending or if you need a loan, feel free to contact me through my profile page!

Good Luck!
  • August 05 2013
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