Less than 20% down payment?

Asked by Chris, Mountain View, CA Sat Apr 6, 2013

Hi All,

I am starting to look at buying a first house (will be primary residence), and was wondering if it is possible in this market to get a mortgage with 80%?


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Geof McLaugh…, , Walpole, MA
Wed Jan 15, 2014
Even under the new Qualified Mortgage (QM) guidelines that just took effect, it's still possible to get a mortgage with less than a 20% down payment. However the days of low down payment mortgages may be coming to an end with the eventual unwinding of Fannie Mae and Freddie Mac.

Fannie Mae and Freddie Mac used to have a 3% down payment program for low to moderate income borrowers, but both of those have been discontinued (Fannie Mae was the last, but it was discontinued the end of last year).

The only remaining low down payment programs for typical borrowers are FHA (3.5% down payment) and state affordable housing programs like MassHousing in Massachusetts (see below).

I would check to see if California has a state affordable housing program as that type of financing will no doubt offer significantly better financing terms than a FHA loan.
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Randall Ortiz, Agent, Sacramento, CA
Mon Apr 8, 2013
You can definitely do less than 20%. I work with a great broker that can help you with this. Contact me if you would like his information.
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Robert Chome…, , San Diego, CA
Sun Apr 7, 2013
Yes there are all kinds of options for less than 20% down. I think 10% conventional is the sweet spot because the mortgage insurance is very low and you could concentrate to paying a little extra to the principle to remove the MI in a few years. 3% down and 5% down conventional are other options.

I do not recommend FHA any more unless you have to go FHA, as the mortgage insurance is so high 1.75% up front and at least 1.35% a month. And the minimum the MI stays on is 11 years. It stays on for the life of the loan with less than 5% down.
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, ,
Sun Apr 7, 2013
Putting down 20% is only required if you want to get around having to pay mortgage insurance.
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Robert Spino…, Mortgage Broker Or Lender, Mill Valley, CA
Sun Apr 7, 2013

I'm going to take a different approach than some of the responses below. Whether or not you have 3.5% down or 35% down, it helps to know your options and the pros and cons of putting down less than 20% from a financial and budgetary standpoint. Right now it might be a strong sellers market and your offer might be perceived a certain way, but don't let that deter you from figuring out what's best for you.

Markets don't move in a straight line. Today's sellers who laugh your offer off of the table, might be tomorrow's who chase your car down the street in hopes of getting anything in writing.

Let me know if I can help you figure it all out.

Rob Spinosa
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Scott Godzyk, Agent, Manchester, NH
Sun Apr 7, 2013
Chris it sure is, the key is for you to meet with a local and trusted loan officer who can pre-qualify you and after looking at your credit and financials let your know what programs you may qualify for. There are no money down, 3.5%, 5% and indeed 20% down programs depending on your credit and financials.
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Gregorio Den…, , San Diego, CA
Sun Apr 7, 2013
Nice advertisement Thierry, well done.
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Thierry Abel, Mortgage Broker Or Lender, Corte Madera, CA
Sun Apr 7, 2013

There are a lot of Programs that will let you put less than a 20% down payment.
If you can afford at least a 10% downpayment, you could get a 90% financing with NO MORTGAGE INSURANCE.

Feel free to contact me for more details
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Grace Hanamo…, Agent, Cupertino, CA
Sun Apr 7, 2013
Hi Chris,

As the others have already stated, there are definitely loan vehicles with less than 20 percent down but what Thomas Shepard wrote below is absolutely true. When looking for housing, anything less than 20 percent down will cause your offer to be less favorably than a buyer with a higher down payment and a loan preapproval. Work with your trusted lender to determine the best loan options for you.

You might also consider maximizing your purchase by using a discount Realtor for assistance. A discount Realtor s not less qualified than a full commission agent, but at the end of the transaction, you will be entitled to a rebate or to have your LAN fees covered by the agents commission rebate to you. Good luck!!

Grace Morioka
Allison James Estates and Homes
50% Commssion Rebate on Qualified Purchases
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Jacob Varghe…, , San Jose, CA
Sat Apr 6, 2013
Hi Chris,

The answer is YES.

It is better to get Pre-approved, this way you can shop with confidence.

NMLS 327086
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Marcy Moyer, Agent, San Ramon, CA
Sat Apr 6, 2013
Chris is is possible to get mortgages with 20% or less down. If you do go for less than 20% you will have to pay mortgage insurance. Sometimes this is a good idea because as the market appreciates some homes will not appraise for the price that you have to pay to get your offer accepted. By putting 10% down if you have some cash over that you can make up the difference between the appraised price and the offered price.

Marcy Moyer
Keller Williams Realty Palo Alto
DRE 01191194
Web Reference:  http://www.marcymoyer.com
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Terri Vellios, Agent, Campbell, CA
Sat Apr 6, 2013
Yes, there are programs with as low as 3% down depending on the house, your credit, etc. It's best to talk with trusted lender.

I can recommend one for you.


All the best to you.
Web Reference:  http://www.terrivellios.com
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