Down Payment Requirements…

The Real Story…

News and commentary about the real estate market and related topics.

Dave Parrish, ABR®, CSP, GRI, ePRO®,REALTOR ®, RE/MAX MarketPlace

The opinions expressed here are my own and don’t necessarily represent those of RE/MAX International.

Down Payment Requirements…

A key element of buying or selling a home in today’s market is how much the purchaser will have to provide as a down payment on the home in order to get a mortgage. As with almost every aspect of today’s real estate market there are no simple answers. However, a general rule of thumb is the lower the down payment requirement, the more prospects a seller has for their home. With that in mind, let’s approach the down payment requirement from the least to the greatest.

There are still ways to buy a home with little or nothing down.

VA Loans: For those who are actively serving or those who have served in the armed forces of the U.S. and have received an Honorable Discharge there is the possibility of a government backed loan requiring no down payment.

USDA Rural Development: The Department of Agriculture through its Rural Development program provides financing that does not require a down payment (actually provides up to 103% of the purchase price so that the funding fee may also be included). To qualify the home must be in a zone approved by the USDA for these loans. These zones are subject to change based on Census results. For example portions of northern Shelby County are currently approved for USDA Financing. Following application of the 2010 Census results, it is very likely that many of these areas (Chelsea and Calera for example) may no longer qualify. USDA Financing also has additional requirements concerning income limits and credit limits that will eliminate this as an option for many.

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