For a short sale, a deposit would be required once the 3rd+ party lender approves the short sale.
For a foreclosure, you will be required to place a down payment within a certain amount of business days after the bank accepts your offer.
The amount of down payment IN THIS MARKET will affect buyer costs. If a buyer is a saver but has limited income, greater down payment means lower overall costs and this may be the advisable plan for that buyer. If a buyer has big income he/she may wish to keep their cash for other uses. Either way the amount of down payment will affect morgage amount and in the end, quality of life and if lifestyle will dictate the proper path mroeso that anything else. The algebra can be handled by your mortgage broker when you find your dream home.
But that didn't answer your question.
Pro - larger down payment gets the loan approved at the best terms available, in turn providing the lowest monthly payment. There's a particularly large break point at 20% down because just crossing that threshold has an exponential cost increase (assuming less than 20% down). If the loan is 80.1% of the home's value then you'll have mortgage insurance and a higher interest rate. Better to put down that .1% extra if you've got it.
Con - it's tough to get your cash back out of a home these days. It used to be you could pop down to the Golden 1 Credit union or Union Bank of CA and easily tap into a home equity loan. Not anymore. It is very difficult to convert equity to cash these days.
Obviously from your point of view, no or low down payments sounds very appealing especially if you have little or no money to put down. However, you would face the highest monthly payments, depending on your loan and interest rate.
Another benefit to you is that you have very low risk in terms of lost equity should you need to sell sooner than you expect and the market hasn't rebounded enough for you to recover your down payment and selling costs.
Submitting an offer without an initial deposit and down payment makes for a very weak offer. Most sellers will question your seriousness and your ability to close escrow if you don't have some kind of down payment and initial deposit with your offer. Without a down payment, your offer may not merit a glance.
Don't really understand the question as in today's lending environment there is no such thing as zero down any longer. If you're asking whether to go FHA (which requires significantly less down) or conventional, assuming you can qualify for both, it's a matter of cash in the bank vs larger mortgage payment. Closing costs for FHA loans are also significantly higher.
Generally speaking you are looking at the following for down payments:
FHA - 3.5%
Conventional - 15% - 20% (there were some 10% down programs but not sure if still available)
1-4 unit bldgs - 20% - 25% down
5+ unit bldgs - depends upon the rent rolls but generally speaking 35% - 50% down.
talk with some reputable lenders and they can give you the latest options
Lance King/Owner-Managing Broker
If you mean â€˜down paymentâ€™, you cannot get a loan (except VA) with out a down payment of some kind. HomePath is as low as 3%, FHA starts at 3.5%, Conventional can start at 5% with PMI. Ideally, the larger the down payment, the better the loan, the lower the rate, the lower your monthly payment.
If you mean â€˜good faith depositâ€™,
Pros: They'll look at your offer.
Every offer has to be submitted with a deposit of some kind. I tell my sellers not to accept anything less than 1% down. If itâ€™s a multiple offer situation, we ask for a minimum of 2%, usually 3%.
Cons: No deposit, no offer.
Pros: Buying a home with absolutely no down payment is probably the best thing one can imagine. It is like renting a place of your choice. You can make improvements in the house.
Cons:You need to have an excellent credit. Ususally these programs charge higher points and if that is added to your loan amount, actual loan amount is bigger than house payment. These programs may charge higher interest rates too, so your house payments will be higher.
Please, check with your lender about the rates, points, duration and type of loan before making a decision.