Low Down Payment Mortgage Financing
It's More Than Timing the Market

I'm frequently asked about low down payment mortgage programs. Case in point, due to the price of real estate in the resort area of Cape Cod, a home buyer waited nine long years hoping for a decrease in property values. In spite of a recession that lowered the price of homes, she still could not buy a house. (You'll meet her in a moment.)

Getting a Mortgage Is Not About Timing the Market

This is a predicament for other home buyers too. When money is flowing, economic optimism reigns. This optimism causes home values to rise. Fortunately though, low down payment mortgage programs are abundant.

Contrast this scenario to recessionary periods. True, the price of homes drop dramatically. However mortgage companies, driven by pessimism, begin to require more investment from the home buyer in the form of larger down payments.

First Step: Select a Local Real Estate Agent

Buying in a resort area compounds this problem where even the most understanding mortgage lender requires a larger investment on the part of the home buyer.

For this reason, niche real estate and unique communities, such as Cape Cod benefit from local assistance.

With this in mind, take the first step by searching for a local real estate agent who specializes in your specific area or type of property.

By working with a real estate agent, not only will you have access to desirable properties you might miss on your own, you can ask for referrals to local lending institutions who may be more accepting of low down payment financing.

As promised, go here to meet the Cape Cod home buyer with a down payment dilemma.

Second Step: Compare Mortgage Lenders

After finding a competent real estate agent, ask for three referrals to local trustworthy lenders. How can you determine which are the best mortgage lenders?

Here are 6 simple steps to help you compare mortgage rates and lenders.

Ask Kate about the Typical Size of Down Payments

By Michael B. from Highlands Ranch, Colorado


Is there a typical percentage amount used for the down payment on purchasing a property?

Ask Kate answers: Typical Size of Down Payments

Dear Michael,

Because the percentage of the down payment triggers different guidelines, the typical increments for conventional mortgages are 3%, 5%, 10%, and 20% or more. With a down payment of 20% or more, there is no required mortgage insurance added to the monthly payment. (See below.)

The most common down payment for FHA Home Loans is 3.5% but again, different thresholds trigger different guidelines and in general, larger down payments help ease guidelines.

For VA Home Loans and USDA Rural Home Loans, zero down is most common.

Down payment percentages fall under the loan-to-value (LTV) category in underwriting criteria. For more on LTV, go to Who Broke the Mortgage Loan-to-Value Calculator.

Best wishes,

Kate Ford

First Time Home Buyer Credits and PMI

If you are buying a home as your primary residence, read this about first time home buyer credits. An alternative to saving a 20% down payment, this generous credit could be your ticket to buying a home sooner than you think.

Paying private mortgage insurance is another piece to the puzzle when you have not saved 20% for the down payment. For easy to understand information, visit What Is PMI - Solutions and Answers.

You Can Ask Kate Too

What if you could ask a mortgage insider about buying a house? Now you can!

Ask Kate is specifically designed to answer your questions and create dialog regarding mortgage financing.

You'll also find a wealth of information at Kate's Best Mortgage Rate Blog packed with the latest additions to this website, interest rate updates, and a fresh approach to affordable homeownership.

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