Is it absolutely a requirement to put down 20%?

Asked by Srenee, Temecula, CA Mon Mar 18, 2013

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Michele Kole, , San Diego County, CA
Fri Mar 22, 2013
Hi Shegetschweiler,

Lots of good advice has been shared; so I'm sure you get the idea that 20% down is not your only option. However, in this current market with lots of buyers biding on the same property you want to make sure your team presents you in the best light. You can be successful even if you don't have all cash or 20% down.

Make sure you have a good loan officer and real estate agent working with you. They can put you in the best position by using their experience and skills to your advantage. The agent will have in hand a solid "loan pre-approval" from your loan officer, a good letter from you explaining why you want their house, and your loan officer will call the listing agent ahead of time to tell them why your offer is the one that should be chosen. These are tactics I've had succeed time and again.

If you have any questions, I'd be happy to discuss your options.

I wish you every success!

Michele Kole
Senior Loan Officer
Land Home Financial Services
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Michael Alex, Agent, San Diego, CA
Mon Mar 18, 2013

No, there’s no requirement to put 20% percent down for a home mortgage. But there are benefits, the benefits for a conventional 20 percent down loan is that there’s no monthly mortgage insurance, you will have a lower interest rate, which makes your monthly mortgage payment lower. Under writing guidelines will be more flexible then a VA or FHA loan. If you or your spouse have been in the military than you can qualify for no money down, no monthly mortgage insurance VA loan. You can also get a FHA loan with as low as 3.5 percent down, in some cases you will have monthly mortgage insurance only for the first 4-5 years.

If you need assistance with a lender, I recommend my partners Brian Shaw and Mark Buchanan with San Diego Funding. With their professionalism, honesty and attention to detail along with their knowledge of finance have earned him high marks among their clientele and top ranked in volume of sales in the United States. Their direct number is 858-356-4006.

Best to you,

Michael Alex
Real Estate Consultant
“The Trustworthy Choice in Real Estate”
cell. 858.652.9218 | fax. 619.269.3766
Pacific Sotheby's International Realty
San Diego,CA
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Robert Chome…, , San Diego, CA
Mon Mar 18, 2013
No you can put as little as 3% down. Zero down for active military or veterans.
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Cory La Scala, Agent, San Diego, CA
Mon Mar 18, 2013
Thank you, Daniel, for the heads up! Not all FHA changes begin in April. The mortgage insurance
rate is going up to 1.35% on April 1st, but the mortgage insurance switching to the life of your loan won't happen until June 1st. In this market, that's not far off. Buyers usually have to submit a few offers before setting one accepted.

It just goes to show how things constantly change in this industry!
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Cory La Scala, Agent, San Diego, CA
Mon Mar 18, 2013
Tons of good information here. One thing about 3.50% FHA loans. Beginning in a couple ofweeks, the mortgage insurance you're required to pay for five years minimum will now be required for the life of the loan. And since most lenders have a 5% conventional loan program, this might be a great option for you. 3% down HomePath loans ore only for homes owned by Fannie Mae (bank owned), so you're limited to only those properties.

Keep in mind that you'll be competing with a lot of other buyers, many with down payments of 20% or more, so your offers are going to have to be strategic. Thinking a little out of the boy is key.

If you have any other questions, or would like some lenders to talk to, feel free to call or email me off forum.

Warm Regards,

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William Brow…, Agent, La mesa, CA
Mon Mar 18, 2013
It depends on the loan program you choose. Some complexes are approved for VA financing. In San Diego you can buy up $500k with 0 down. If you purchase above $500k you need to bring in 25% of the overage. For example, a $600K purchase would require a $25k downpayment using VA financing.
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Desmond Coll…, Agent, Solana Beach, CA
Mon Mar 18, 2013
Absolutulely not.... 2O % is what is usaully required on conventional financing. The goverment have low down payments opptions for first time buyers. FHA Iinsurred loans require as little as 3.5 % of the purchase price depending on your credit history. You can also work out creative financing with a seller who has no mortgage. These are just a few of your options.

If you have any more questions I would be happy to reffer you to a mortgage professional.

Desmond Collins
(619) 366-6999
Dyson Real Estate
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Sandra K Hat…, , San Diego, CA
Mon Mar 18, 2013
Sandra Hatherley, Realtor, San Diego, Ca.


In reviewing the answers here it looks like you already have the information you need.

Just one caveate....the market is so competitive that the more down the better. There are many people out there with large down payments and a lot of cash buyers also. Depending on your area it could be hard to get an offer with a lesser down payment accepted.
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Daniel Lehman, , San Diego County, CA
Mon Mar 18, 2013
Its absolutely not a requirement to put 20% down. ALSO, there is ALWAYS PMI on a loan with less than 20% down (conventional).

The difference is that PMI can be structured in several different ways. Loans above 80% loan to value (less than 20% down) with "no mortgage insurance" are called LENDER PAID mortgage insurance premiums, or they have been called "tax advantaged mortgage insurance", etc.

What it entails is taking a higher interest rate that you would qualify for anyways, and then the bank makes a yield and pays your mortgage insurance in the form of a higher interest rate, or a chunk of money up front as opposed to the borrower making monthly payments.

It is good for MARKETING, but in reality, I would rather pay a lower interest rate, and a monthly mortgage insurance payment that can be REMOVED after 2 years (with 20% equity) than pay a .25% or higher rate for the entire life of the loan. That is, pending you plan on keeping the loan long term.

So, I got off on a tangent, BUT,

-conventional you can do as little as 5% down (and it WILL have mortgage insurance, whether borrower paid or lender paid),
-FHA you can go 3.5% down and even get down payment assistance that reduces that to .5% down,
-VA is 0% down up to San Diego maximum loan amount of 500K. Anything above that you have to put 25% on the difference. (ie: 600K would be 25K down payment)

There are also specialty things like Homepath which allows for very little down with no appraisal, but it has to be a Homepath property (Fannie Mae Bank Owned).

Its also untrue that you need any kind of occupancy requirement on a condo IF you are not buying an investment property... As long as you are owner occupying the condo, it is irrelevant. 51% occupancy pertains to investment property purchases. With 10% down you can do a limited review through Freddie Mac, and with 5% down it would be an expedited review through Fannie Mae, and some HOA issues would come into play, but occupancy would not be one of them...

If anyone has any questions about this information, you can contact me at

Daniel Lehman
WJ Bradley Mortgage, LLC
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Mary Lawler, Agent, San Diego, CA
Mon Mar 18, 2013
Hi again Shegetschweiler,
It's not an absolute requirement to put a down payment of 20% of the purchase price of a property. VA and FHA loans allow for much less to be put down. Even some conventional lenders are coming out with loan products that require a smaller down-payment. You still may have mortgage insurance, which is increasing very soon on FHA loans, but with exceptions, 20% is not absolutely required.

If you would like to be directed to a lender who can help you find the right loan and the amount you are qualify for, please contact me.

Thank you,
Mary Lawler
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Ryan Bourda, Agent, San Diego, CA
Mon Mar 18, 2013
There are a lot of loan programs that require less than 20% down. One of the most popular is an FHA loan that requires 3.5% down. If you are in the military you could explore a VA loan which requires Zero down. I suggest sitting down with a lender who can take a look at your financial picture and give you your different options. Shoot me an email if you'd like a couple lender referrals.

Good luck!
Ryan Bourda
Coldwell Banker
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Joey Rennick, , 91941
Mon Mar 18, 2013
No it is not a requirement. I just closed with a buyer who got a 5% down conventional loan. There is an added cost though for private mortgage insurance (talk to your lender for more details). NFCU is offering this program with NO mortgage insurancew. However, If you are offering on a condo that has less than 51% owner occupancy, then you would likely have to put 20% down or more. Also look into FHA financing which requires only 3.5% down.
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Maria Claudia…, Agent, San Diego, CA
Mon Mar 18, 2013
Some banks are doing 5% down no PMI.
Also, the homepath website sells their own foreclosed homes and allows you to put only 3% down and no PMI.
Several banks and lenders are approved to do homepath financing.
if you need names and website link, please send me a private message.
Good luck!
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Shannon Ande…, Agent, San Diego, CA
Mon Mar 18, 2013
if you are asking about buying a home, the answer is no. If you are asking about buying and not having MI, then you should talk to a lender, but my understanding is yes.
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