Hi Nate,

A mortgage broker I know recently made me aware of a loan program with very competitive interest rates on a 5/1 ARM with as little as 11% down. This loan product requires that you have reserves, and the reserves can be in a 401K or other retirement account. The maximum loan amount for this program is $1.875M. For more information about this loan, contact Ben Miller at 415-577-2265 or bmiller@rpm-mtg.com.

Best of luck to you.

Dear Nate,

The long and the short of it is yes. Please email Serena Greening to find out..... serena@serenagreening.com. Or go to Resources on my website http://www.sallyrosenman.com and go to Mortgage Brokers.... I have contacts for many good ones and for folks at the big banks as well.

Any of them will tell you your options and unfortunately, things are changing seemingly daily. If this is your first purchase, please let me know. I will email you the new Obama guidelines!

Best,

Sally

Nate,

You can put down less but the interest rate on anything above 80% will be higher than one should expect. The credit markets are being stupid right now in reaction to the past stupidity.

What none of the responders understand is that you are looking for a jumbo loan, based on the zip code. You need to talk to mortgage brokers and bank lenders to find out the criteria that day. Literally that day. Hopefully things are on the path to getting straightened out and normalcy will return.

I believe that Priviate Mortgage Insurance will come back into use for people that don't have 20% down payments. In SF 20% down is a tough nut to crack. Having the ability to service a loan should be the criteria. Having to save 20% for an $800K property and have months of reserve is tough to do when your renting, living and possibly raising a family.

Good luck and let me know if you need any referrals to lenders.

Lending answer:

There are three major impacts:

(1) Increased interest rate and/or fees: Both Fannie Mae and Freddie Mac charge lenders additional fees for loans based upon the borrower's credit score and down payment. The additional fees will cause the bank or lender to charge a higher rate of interest, additional discount points, or both. These are in addition to whatever the lender might charge for the increased risk of less tan 20% down. The impact could make a significant increase on your rate, monthly payment, and closing costs.

(2) Both Fannie Mae and Freddie Mac require a borrower to pay for Private Mortgage Insurance (aka PMI) on all loans wth less than 20% down payment. Due to the high number of loans in default (or foreclosed), every PMI company has raised rates and restricted eligible borrowers and properties. You must qualify for mortgage insurance just as you must qualify for the mortgage loan to be insured.

California is considered a high risk market, so additional PMI restrictions and rate increases will apply. In some cases, depending on credit score and/or property type, PMI might be unavailable. The monthly PMI payment will be calculated into your debt ratio which will reduce the amount you may borrow, lower the price of the home you may buy, and possibly trigger additional interest rate increases and/or fees if your debt ratio rises above 38%.

(3) As Dana points out below, many lenders will refuse to write loans with less than 20% down in California regardless of the borrower's qualification, which means you will have fewer lenders to compete for your business.

In the end, you may find that Conventional loans are too expensive, too difficult to qualify for, or simply unobtainable.

Dana's advice to consider an FHA insured mortgage is wise. Although you will pay a lump sum at closing to FHA's insurance pool as well as a monthly mortgage insurance payment, the rates offered for FHA insured loans are very competitive with conventional rates (FHA insures the lender against loss up to 100% and is backed by the full faith and credit of the United States; PMI is private sector insurance up to a maximum of 35% coverage for the lender).

Whomever you seect as a lender, request a side-by-side comparison of a conventional loan versus an FHA insured loan to be sure you are getting the best deal.

Hi Nate,

The short answer to whether or not you can put less than 20% down is "yes."

The better answer is to keep doing what you're doing here on Trulia. That is, research. Since I am in home finance, my suggestion to you would be to work with a lender or two in order to get pre-approved. You can then begin to understand your finance options inside and out AND before you're in contract on any property.

By getting familiar with the pros and cons of any financing scenario you will be able to more confidently search for properties and know you'll be OK with the financial responsibilites once you're an owner.

Again, if I can help, let me know. There is no cost or obligation in making a pre-approval application with Mortgage Master.

Thank you!

Rob Spinosa
rspinosa@mortgagemasterinc.com

Yes, you can absolutely buy a home with less than 20% down. FHA is a great option and there are also other loan programs with low down payments. You will have to pay for mortgage insurance if you are putting less than 20% down. You do not have to be a first time home buyer.

I don't know your area, and lending policies do vary. Generally, however, you must put 5-10% down and then you have to pay PMI (Private Mortgage Insurance). If you are a first time home buyer, the FHA options mentioned below are good. There might also be local programs you can take advantage of.

Do you have an agent that can recommend a reputable lender? I know some good agents in CA, and if you need me to connect you, I'd be happy to.

if you are a first time homebuyer,you can apply for an FHA loan at 3.5% But due to the tightening up of credit 20% is the minimum most lenders are willing to consider for conventional financing. some require even more,