Real Estate with Dallice – Down Payment
Whenever someone mentions real estate down payment, most people think they need a boat load of money. Well, you might be surprised how little you actually need.
Down payment depends on several things.
If you are buying investment property, then yes, you need a minimum of 20% down. 25% will get you a better interest rate!
If you are buying a house to live in, you need as little as 5% down payment with a conventional loan, but again, you will get a better interest rate if you put down more. 10% is good. 20% is better. 25% will get you the best interest rate on the loan.
Have you heard of an FHA loan? Persons buying with an FHA loan need as little as 3.5% down payment, but should expect that they will pay a higher interest rate because Mortgage Insurance (and additional percentage) must be included with every mortgage payment they make. An FHA buyer should plan to pay more in loan closing costs and remember that there are loan amount limits for FHA loans, that are area dependent. The buyer might also expect a more rigorous appraisal process. (For this reason, Sellers tend to choose non-FHA contracts over FHA contracts to buy – we’ll discuss this in the Competitive Offer to Buy post.)
Beyond the scope of this quick article are down payment assistance programs. In Colorado we have for instance: CHFA (Colorado Housing and Finance Authority) who help provide affordable housing to low income Coloradoans. Using a program such as one that CHFA offers, can greatly reduce the amount of down payment you need, if you qualify. If you are not in CO, then chances are your State has a program for you too. Need help finding out about it? Contact me.
And then there is gift or privately loaned money as a down payment. Before you go moving money around willy-nilly, you need professional advice on this! Not all money can be used for down payment and in order to give you the most options possible, a qualified person should be giving you advice – early and often!
The long and short of it is, you may be closer to achieving the dream of home ownership than you think, so why are you still paying rent (IE: someone else’s mortgage)?
Contact me if you have questions regarding down payment, assistance programs or the trail of the down payment money you’ll be using. It is NEVER to soon to get good advice, make a solid plan and gather a professional, experienced and knowledgeable team to help you.
If I don’t have the answers, I have trusted lender contacts who do. Together we will make it happen!
Congrats on reading to the bottom. 🙂
Next post I will talk about saving money. Yes, everyone needs to be able to do this so I will see you then!
Dallice: 303-746-6765