Rebecca Unruh, Home Buyer in Prescott Valley, AZ

how much percentage is the down payment and for buying a home and how much is the closing cost?

Asked by Rebecca Unruh, Prescott Valley, AZ Sun Jan 23, 2011

We are first time home buyers and dont have much money to spend. we were wondering how much is the usual percentage used for down payments and how much do closing costs start at?

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Can anybody tell me why it is that so many of us feel compelled to give the exact same answer that another person has already given??
3 votes Thank Flag Link Sun Jan 23, 2011
Wow, a lot of out of towner's her on your post. In Prescott Valley, you can get 100% financing through USDA loan or VA. The difference is your don't have to be a veteran to qualify for USDA, there is limited funds for this program. Also you should talk to a good local lender. They will help you decide the best move.
Let me know if you need help,
Happy house hunting.
1 vote Thank Flag Link Mon Jan 24, 2011

I am going to chime in here with some additional thoughts.

There is a difference between what you can qualify for and what you are comfortable living with. You do not want to be married to your home - and you will want to look at the total cost of the loan as well as the monthly payments. Only you really know your budget.

Owning a home does come with expenses that you will want to account for. You may need some new furniture, some money to decorate (paint, fixtures, landscaping etc.) and will want to set aside some money for maintenance (Plumbing problems etc.) You will want to have enough to cover your othe financial obligations (car payment, student loans, credit card payments etc.) and you will want to live life beyond groceries and utilities.

I applaud you for asking a great question and wish you well in your home search. And remember - change your heating/air conditioning filters at least twice a year :-)
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1 vote Thank Flag Link Mon Jan 24, 2011
It really depends on what loan program you use and what home you buy. For example, if you buy a bank owned home in Prescott Valley that qualifies for a USDA loan, your down payment may be as little as 0%. Closing costs will be around 3% of the value of the home. There are several homes that I am aware of in the Prescott Valley that are great deals. I can get you to a great local mortgage consultant that can give you free advice and pre-qualify you to give you a good idea of what you will be spending.
I am Realtor in the Prescott Area. My office is near downtown Prescott. Give me a call if you need further assistance.
1 vote Thank Flag Link Sun Jan 23, 2011
Congratulations on deciding to buy. Down payment amount will depend on the loan programs available to you. VA, and USDA offer Zero down loans, but you must qualify for these programs. FHA requires as little as 3.5% of the purchase price. Conventional financing is available in many areas between 5% & 20%.
Closing costs can be as little as Zero as well, but 2-3 percent is most common. You'll need to meet with a lender who can discuss your credit and qualifications for the various programs to advise what may be possible for you. A good Real Estate agent can help structure your offer to request the seller pay a portion or all of your closing costs in conjunction with your lender. Best of luck home buying.
1 vote Thank Flag Link Sun Jan 23, 2011
You have some options since you are in Prescott Valley. There are zero down programs being the USDA loan in your area and then there is the VA loan if you are a Veteran. Closing costs vary but if you are making offers you should ask your realtor to request at least 3% of the closing costs be paid by the seller. If you need some help with a realtor in the area, I can help you with that as well or select some of the fine realtors on this site.
There are lender fees, title fees, and an escrow account that are your taxes and insurance. Good Luck!!

Matt Puzz
Licensed Loan Originator
Amerifirst Financial. Inc.
apply online:
1 vote Thank Flag Link Sun Jan 23, 2011
I have been thinking about you this morning Rebecca. I did want to add that you will also want to budget in some savings for the future. As this is your first home, you may want to start socking away some money for your "move up" home and of course for other financial goals. I guess the point I am trying to make, is to buy what fits in your budget now and then move up. A good local loan officer can help you will all of that.
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0 votes Thank Flag Link Mon Jan 24, 2011
Without having more information, all of which you cannot disclose in a public format, I would say you should speak to a lender. They will give you a very good idea about your options based on how much $ you can put down on a home, your credit score, etc. VA loans offers 0% down, FHA loans offer low down (3.5%). The closing costs can vary, but 3-5% of the purchase price is a reasonable gauge. Now is a great time to buy, interest rates are still low and homeownership is still worth pursuing. Good luck!!
0 votes Thank Flag Link Sun Jan 23, 2011

I have a program available that has no down payment and no closing costs...
0 votes Thank Flag Link Sun Jan 23, 2011
This is a very open endend question so no one can give you a solid answer. The amount of money you will need will depend on the type of loan program you qualify for and the cost of the home. I suggest that you go down to your bank with some of your financial documents (pay stubs, w2's and taxes for the last two years, any investments, retirement or bank statements, social security card to pull your credit report ) and speak to a mortgage broker before you begin your search.
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0 votes Thank Flag Link Sun Jan 23, 2011
Wow! When I started my answer, there was only one answer. I took a short break & then finished my answer & now there are seven...

Good luck & hunting for your new home,
0 votes Thank Flag Link Sun Jan 23, 2011
Just a quick aside --> contrary to what many folks think, mortgage loans are not tied to the particular property, even on bank owned (foreclosure) properties. Your mortgage financing will be done by a third party lender, and as has already been stated, there are multiple loan products, guidelines and restrictions. You should consult with a local, reputable real estate agent/Realtor, and then consult with a local, reputable mortgage lender. With a team of professionals to assist, guide and counsel you thru the process, your first home buying experience should be a MUCH less overwhelming and scary process.

All the best!
0 votes Thank Flag Link Sun Jan 23, 2011
Hi Rebecca,

Congratulations on your decision to by a home.

Kyle is correct that you can get an FHA loan with only 3.5% down. You are also eligible to receive up to 6% of your purchase price from the sellers to pay your closing costs, although you shouldn't need the entire 6%. Be sure to let your real estate agent know that this is something you want to do if you would like the sellers to pay your closing costs.

I see that you are from Prescott Valley. If you are planning to buy in Prescott Valley, you may qualify for a USDA loan where you can go in with $0 down.

Both of these loan programs are very good, but there are advantages & disadvantages to each. I work for a mortgage bank in Scottsdale that underwrites and funds both of these loans. The USDA loan does require their final approval.

Please feel free to contact me. I'd be happy to help you with any questions you may have.

All the best,

Roswell Moore, CMPS
Certified Mortgage Planner
480-422-5095 direct

We are a Direct Lender, Mortgage Bank where we originate, process, underwrite and fund, in-house, FHA, 203(k), VA, USDA, Jumbo, Conventional, loans to Canadians, Australians & other Foreign Nationals, on time. NMLS ID 263779 | AZ BK 0903725
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0 votes Thank Flag Link Sun Jan 23, 2011
Talk with a lender, depends what kind of loan you qualify for. FHA for example is 3.5% while some conventional can be 10-20%. Far as closing costs, 3% is about right, again depends what you ask for on contract. Most of the offers i have been making for clients ask for 3% to pay for closing costs.

Buyers market, find a good local Realtor and they will answer all these questions for you and the best part? Wont cost you anything, the sellers pay for the buyers agents.
Good luck.
Spirit Messingham
0 votes Thank Flag Link Sun Jan 23, 2011
There is no straight forward answer to that question. There are several different loan programs that have various down payment requirements however. The rule of thumb is FHA 3.5%, VA Zero down, USDA zero down, and FNMA or FHLMC 5% down. All of that is contingent on your FICO score however. For instance, if you have a credit score below 600 and want to use FHA the bank that I work at will allow it; however we will increase the down payment requirements. Other banks have different overlays, such as a minimum 640 credit score for a VA zero purchase. The list goes on and on.

As for the required closing cost you are going to have to use some rules of thumb here too. For instance we usually say 3% covers the closing cost however that rule does not hold true if you are buying say a $40,000 manufactured home in the outlying areas of Phoenix. I use $3,000 as a rule of thumb for cost up to about $200,000 purchase price. Please keep in mind that these are very general rules, and a quick conversation allows a lender the ability to give very detailed information. Most lenders especially the ones like myself will not issue any sort of written quote until after we pull credit so be prepared for that. This is for a couple of reasons, first it could cost me my job. Secondly, the new Reg Z rules could actually bind the bank to that estimate, so its in everyone's best interest to ensure that we are quoting deliverable estimates.

I hope this helps and if you have any questions please feel free to contact me anytime,

Ron Hall
0 votes Thank Flag Link Sun Jan 23, 2011
Without your overall finances, credit, debt, etc.--Consider visiting with any qualified loan officer, after reviewing your overall financials, he/she can make a determination on qualification, the type of loan, how much, how much down, etc.; also ask your loan officer about closing costs, as much will depend on lender fees.
0 votes Thank Flag Link Sun Jan 23, 2011
The min down for an FHA loan is 3.5% closing costs will vary depending on loan size but a rough average for a normal house is around 4-5k.

If you want actual loan quotes please contact me, I am local licensed Morgage lender.
0 votes Thank Flag Link Sun Jan 23, 2011
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