How low of a down payment can we reasonably expect to get approval for during the purchase of a home within the next year?

Asked by Virginia_mom, 22015 Wed Jun 16, 2010

We have very good credit scores and a high income, but do not have a lot of cash on hand (over and above what is necessary to cover closing costs) due to loss of equity in current home.

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Gerda Gaetjen, Agent, McLean, VA
Thu Jun 17, 2010
It will depend on your individual situation, if you are eligible for VA (active duty or retired military) financing you qualify for 0% down plus seller can pay closing costs. At contract acceptance you will have to provide an earnest money deposit which is usually based on the sales price (the higher the asking price the higher the earnest money deposit should be). Another 0% down option exists with VHDA, but there are income limitations.
The other option would be a FHA loan program which will require 3.5% down, but seller can pay closing costs.
Hope this helps!

Gerda Gaetjen, ABR
RE/MAX Allegiance
0 votes
Erik Weissko…, Agent, fairfax, VA
Thu Jun 17, 2010
Great question! Especially good answer by Tim though most if not all homepath properties are on the MLS!

The real answer is in what you qualify for. Many of the "special" programs have income limitations. So when speaking to a mortgage professional you will need to provide those answers. Some mortgage professionals will "sell" you on what they have...and some will tell you what's available outside of their offerings..Most Mortgage companies have "good money" meaning good rates in specific products..say a 5/1 arm may be best at Bank of America and a 30 year fixed jumbo may be best at Suntrust...etc.

A good well connected Realtor will qualify you based on your needs and long you will live in/own the property, payment etc. and will set you with the appropriate lender who has the best product for you. There are grants available and special programs if you join certain credit unions as well.

Best to be armed with info. because this is a decision that sticks for few years minimum! Have a great day and best of luck!!!

Kind Regards,

Erik J. Weisskopf, ABR,CDPE,CRS,GRI
(C) 703.216.1222
0 votes
dave, Agent, Charlotte, NC
Thu Jun 17, 2010
Virginia mom,

Currently FHA is fequiring 3.5% of tthe selling price as a down payment. I deal with one bank that goes to 3% with good credit score. The only way to go with less fo a down payment is through one of the two governemnt programs.
One is USDA. Here you get 100% financing. however; the home has to be in a rural area and is designated as rural by the USDA to qualify.

The other is if you or your husband are veterans. You cna purchase a home through the VA with no money down.

Last, you mention you have enough saved for closing costs. You could use that for the down payemtn and ask the seller to contribute toward the closing costs X amount of money. The banks are allowing 3% of the sale price to be paid by the seller in closing costs.
0 votes
Lauren Smerb…, Agent, Springfield, VA
Thu Jun 17, 2010
minimum of 3% on a FHA loan, unless you are a disabled vet, then nothing...can even get the deposit back at settlement. Seller can contribute up to 6% of closing costs.
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Kathy Stark, Agent, Burke, VA
Wed Jun 16, 2010
Good evening Virginia Mom

Looks like you are right in my backyard. My office is right near the Pohick Library in Burke. I would be happy to set up a meeting with you and a loan officer to review your options in more detail. My associates are right about the FHA and VHDA options. One thing I cannot tell though is if you or your spouse qualify for a VA loan. For this you or he will have to have served in the military. If you qualify for a VA loan you do not need to put anything down. In fact you might even be able to get the Seller to may or your closing costs. I settled one yesterday and the buyer got most of his deposit back at settlement.
One issue with FHA is that there has been talk in the industry of increasing the down payment required. Since you are not planning to buy until next year it is impossible to tell you what FHA will require for a downpayment at that time.
Let me know if I can be of any further assistance.

Kathy Stark
Weichert, Realtors
0 votes
Joan Stansfi…, Agent, McLean, VA
Wed Jun 16, 2010
Hi Virginia Mom!

From one VA mom to another -- greetings! I've sold many homes this year and last through the FHA program, which requires only 3.5% of the sales price. I also have done a few through the VHDA program, which requires zero dollars down. In fact, my last buyer who went through this program even got her earnest money deposit back in full. Please let me know if your have further questions. I may be reached at 703.919.7761 any time.

Kindest regards,

0 votes
Dan Chase, Home Buyer, Texas City, TX
Wed Jun 16, 2010
I would not be surprised to see down payment requirements go higher, perhaps 5%. No one knows what future changes will bring. For now it is 3.5% down FHA and 0% down for USDA (rural) and V.A. (veteran only) loans.

The blog below may give you some good ideas on how to build up a down payment. It just takes commitment and dedication to suffer and do without now to have a down payment later.…
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Steve Roake, Agent, Naperville, IL
Wed Jun 16, 2010
FHA requires 3.5% down payment. Up to 3% of closing costs can be paid by the seller. I do know of one lender doing 1% down, but I think the requirements are probably pretty stiff to get that approved. Focus on finding some ways to cut back your spending so you can save some money. Google "Dave Ramsey" for ideas.
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