Down Payment Basics
It’s possible for home buyers to get a conventional mortgage with a down payment as low as 3%. However, the down payment requirement will vary based on your personal situation and the type of loan or property you’re getting. FHA mortgage requirements differ. VA mortgages can come with as little as no down payment. The down payment basics can be found in many places. Unfortunately, little information and explanation comes with the choices for the amount of down payment. For example, in the current market of competitive buying, offers with VA financing fall to the bottom of the list in preference. VA loans require additional steps and specific actions which can delay or kill deals from the added requirements. While a VA loan is great for a no down payment option, if the borrower can’t actually purchase a home, how good is it?
If you’re not a first-time home buyer or you are making not more than 80% of the median income in your area, the down payment requirement is 5%.
If the home you’re buying is not a single-family home (i.e., it has more than one unit), you may need to put down 15%.
If you’re buying a second home, you’ll need to put at least 10% down.
If you’re getting an ARM (Adjustable Rate Mortgage), the down payment requirement is 5%.
If you’re getting a jumbo loan, the down payment requirement ranges from 20% to 40%.
If you’re refinancing, you’ll need more than 3% equity to refinance. In all cases, you’ll need at least 5% equity. If you’re doing a cash-out refinance, you’ll need to leave at least 20% equity in the home. Some states limit refinancing to 80% of value.