20% Down Payment Myth
Can you purchase a home for less than 20% down? Read below or watch the video to get the answers.
This is quite a common question that I have been asked over my career, and I’ve been doing mortgages for well over 15 years. The answer has always been, yes very much so, yes.
So yes, in today’s market, and this isn’t a special program, I would say 7, if not 8 out of 10 lenders will offer this minimum down payment 3% across the US for a loan amount as high as $510,400. if you’re purchasing over that amount it will depend on what area you’re in, there could be options with 3 1/2 to 5% down, but just for the sake of this post, across the US you can purchase a home for as little as 3% down with a purchase price to low $500,000 range.
Mortgage Insurance Reduced Rates
Now with less than 20% down you’ll have mortgage insurance and for some folks that seems like it’s a scary term or perhaps seems like it’s a big extra added cost. You know what? Several years ago it was a little bit more so, but now, across the U.S. today’s market mortgage, insurance providers have gotten very competitive and they have really reduced their interest rates significantly over the last three to five years.
So for mortgage insurance on a given an example might cost $400 5 years ago, today it’s probably around $150 all things being equal. So, to have the opportunity to fix your cost of living, to be able to do so with less than 20% down where for most folks, than they can do so sooner than later.
To pay a little extra cost of mortgage insurance, which I understand it doesn’t benefit or protect you, it does protect the lender. However, it allows you that overall opportunity, and that’s where you need run the numbers and see what’s going to make sense for you.
Consult With a Mortgage Professional
This isn’t a one-size-fits-all situation. If you’ve been thinking you would need 20% down now is the time that I really encourage you to talk to a local mortgage professional.
I hope I helped clarify some the facts surrounding downpayment amounts for mortgage loans, especially with regard to rather or not a 20% down is needed.
Should you have any further questions feel free to send me a message.
Senior Loan Originator
Over the past 15 years as a mortgage professional, closing on average 150 loans per year, I have gained a wealth of knowledge and experience about the mortgage industry. My goal with this website is to give you just the INFORMATION you need about mortgages with ZERO sales pitch. I hope you find my posts of value and share it with 1 other person who might find value in it as well.