What determines whether I can get a loan with 10% down payment instead of the standard 20% down?

Asked by jgcvsj, San Mateo, CA Thu Sep 6, 2012

Is it better to wait the 5 months it wilI take me to accumulate enough money for a 20% down payment, or try to go with 10% now while interest rates and home prices are low?

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Julie Rice Thall’s answer
Julie Rice T…, , San Mateo, CA
Thu Sep 6, 2012
The right answer really depends on your personal situation...meaning credit score, purchase price, savings rate, and more. In my opinion, if you can buy today, buy today.

There are several ways to purchase in today's market with less than 20% down, and they are all good options, again, depending on your personal situation. In fact, I have a clinet now that has 20% down, but that will wipe out their cash savings. I am recommending that they put only 10% and take mortgage insurance. For this client, it is a very affordable and flexible option. Here are the three most common ways to buy with less than 20% down:

1) Conventional loan with mortgage insurance
2) Conventional loan with a Home Equity Line of Credit second mortgage
3) FHA

Each of these above options have different income and credit score requirements. A Mortgage Advisors will be able to find the best option for you!

Good luck!
Julie Thall
1 vote
Robert Spino…, Mortgage Broker Or Lender, Mill Valley, CA
Thu Sep 14, 2017
We do a lot of 10% down jumbo financing in CA, but especially in the San Francisco Bay Area. We can presently go to a purchase price of $1.9MM with as little as 10% down so buyers who have the income but may not have yet saved the full 20% do have a shot at purchasing today, even in a highly competitive market.

The answer to your question about buying now or waiting can be modeled out mathematically and we are happy to help with this calculation. It does involve some projections, of course, so I find it helpful to "bracket" the analysis by doing best and worst case. Upon review, the answer becomes pretty clear but there is no best single answer that fits all. Everybody earns and saves at a different rate, all markets experience value change differently and then, of course, there is always a buyer who may have access to a gift or other source of game-changing funds.

In short, we're here to help if you think a 10% down payment is realistic and worth looking into. Thank you!
0 votes
Andrea Gomez, Other Pro, San Antonio, TX
Sun Aug 11, 2013
You can get an FHA loan with 5-10% with some lending institutions but not many. I would recommend finding a broker or service to help you locate a reputable lender that can approve your loan at a decent rate. I have client's who have got approved and received a good rate at The Lenders Network.
0 votes
Suena Suen, Agent, Daly City, CA
Thu Sep 6, 2012
You are right, interest rates and home prices are still low, so better buy now if you can afford.
Depends on what type of properties you are looking for, FHA may not be a good choice, even though down payment is low. A lot of condo complex are not FHA approved, so conventional loan is required. It is better for you to talk to loan reps directly. After analyzing your FICO score, income and expenses, they should be able to give you some suggestions on what type of loan best suits you.
I have connections with loan reps from banks, as well as mortgage brokers. You can contact me so I can send you their contact information.

Good luck,
Suena Suen, CDPE, GRI
Bay 1st Realty & Mortgage, Inc.
Email: suenasuen@gmail.com
0 votes
Jacob Varghe…, , San Jose, CA
Thu Sep 6, 2012
The best solution would be to get a pre-approval. Based on the pre-approval you can take a decision.

NMLS 327086
0 votes
Lance King, Agent, San Francisco, CA
Thu Sep 6, 2012
Depends on the property type and your financials. Typically speaking you will get better rates with more down. We work with 3 excellent lenders who all have different programs. I'm happy to send referrals - contact info below.

Best Regards,

Lance King/Owner-Managing Broker
DRE# 01384425
0 votes
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