It looks like you have plenty of great answers already. I would only add that you should talk to a representative about your options. There are just too many variables involved in your question to give you an accurate answer. I would want to talk with you about your goals and timelines before determining the right loan product and down payment. There are many online tools available to you, but I find the one on one conversations with a loan professional works best.

0% down with USDA (will depend where in Santa Rosa house is)
3.5% FHA
10% conventional
3% Homepath (just for Fannie Mae foreclosures)
Bottom line you need to get pre qualified so that the lender can help you figure out what works best for your needs. Since you are from MN, if you are looking to buy a 2nd home you will need to put 20% down unless you luck into Homepath which is only 10% down. Feel free to call with questions or check out my blog on trulia. We do all the above loans and have an office in Santa Rosa
-Jennifer

All great answers. You didn't mention your price point. The "hot-market" now is anything under $300,000 and its absolutely ferocious UNDER $200,000! One of our Realtors got up and said he had presented 24 offers for ONE client! It's THAT kinda market. Expect to overbid on ANY REO under the price point I stipulated and most likely up to $400,000. We had one we presented on which was priced at $379,900 and had 17 offers. We are going to put into escrow on Monday a property which was an asset for a major lender listed for $164,900 and will go out near the $200,000 mark with 16 offers.
The bigger the down and better off you'll be! We've heard talk of some of the major banks moving towards the "homeowner" vs. the "Investor" purchaser. Even talk of using the rehab FHA loan product the 203b. However this could be a learned process on the part of Asset Managers.

Hi, Santarosa Buyer! I'm not in your area but have friends who are agents and friends in the lending industry there. Please let me know if you need help finding someone to work with.

You should be able to find a loan from 3.5% down on up to 20%. There are some great loan packages available now.

All my best,
Dot

Hello,

Just to add to the other comments, we are seeing many multiple offer situations here in Sonoma County currently and typically the more money you have as a down payment the stronger your offer will be. The FHA 3.5% down program is excellent and I've had much luck with my buyers who've used that particular loan. Everything Michael and James said is absolutely correct and good information and advice.

The most important factor in your success I believe will be working with an agent that really knows the current market and is willing to go the extra mile for you. You'll need to work with someone that knows how to navigate the multiple offer situations, can explain the pros and cons of short sales and foreclosures, listens to your needs, and is willing to be really on top of how fast the market is moving and react accordingly. I'm a very active local agent and would be happy to talk to you about what I do differently than most agents that has really helped my buyers in this market. Best of luck to you with your move and I hope you love living in Sonoma County as much as the rest of us do!

Hi again,

I agree with finding a local agent which I did recommend. I have been a broker here in Santa Rosa and Sonoma County for 20 years. I have had many offers accepted in Santa Rosa with FHA loans in the current market. As James implied each market is different.

Wishing you the best in your search.

Hi Santarosa Buyer,
You should also consult with a local Realtor about down payments. Every market is different and just because FHA has 3.5% down loan, does not mean that is something home sellers are accepting. In the North San Diego area we are seeing 20-30 offers on homes in the first 5 days on the market. You will want to know what the marker activity is like in Santa Rosa so that you can structure your offer to get accept by the buyer.

As for the loan info everything Michael said is right on!

There are still many different loan programs available. If you do not have a big down payment FHA loans are available with as little as 3.5% down plus closing costs. Closing costs are often negotiable and you can sometimes get the seller to cover ones normally paid by the buyer as common practice in Northern California. These include the title and escrow fees, lender points to name a few. However, you should be aware that at the lower end of the market offers are now fairly competitive and so it may be more challenging to get those kind of concessions.

There are also non-FHA loan programs available with lower downpayments. Sometimes rates are not as good on those loans. Rates can be much better when you have at least 20% down. With low downpayment loans banks usually require private mortgage insurance (PMI) which will increase the costs of the loan to you.

The best thing you can do is to begin shopping for your loan. I recommend you call at least 3 lenders to get a quote. You can find a short article on loan shopping on my webstie: http://www.eHomeSonoma.com/loanshop.html that can get you started.

Also consult with a real estate broker or friends for references on good lenders. The lending environment is very competitive so you should be able to find the best service and rates by doing a little homework. I do recommend you work with lenders who are based in the area you are looking to buy in as they can often have better insight into issues that may come up unique to the area.