How much down payment do I need to buy a home???

I had this very question today from someone who is on the fringes of the real estate industry. I thought that this would be good information to share with you all. The answer to the question of "How much money do I need for a down payment in order to buy a home?" is simple yet complicated as is almost everything with regards to real estate. The answer is..."It depends." Which of course brings up the inevitable question of "It depends upon what?". Ultimately it comes down to what type of loan you are able to qualify for and how good your credit is. Below you will find some basic "rule of thumb" kind of information that you can use to determine how much money you need to have on hand.
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[Reposted from Realtor.org the national Realtor website.]

Washington, December 31, 2008

There is some misinformation in the media lately about the required size of a down payment for a mortgage in today’s market, and the blog world is abuzz with misperceptions. Not all so-called experts are knowledgeable in this area, and some experts are being misunderstood.

The facts:
1- An individual may be required to put down 20 percent based on that person’s financial situation. But that is not an across-the-board requirement for all borrowers.

2- A borrower who puts down less than 20 percent is required to obtain mortgage insurance.

3- Even in a declining market, a borrower is required to make at least a 5 or 10 percent down payment.

4- FHA requires a 3.5 percent down payment by borrowers, so long as they meet a 31 percent housing cost-to-income ratio. In other words, anyone who stays within their budget and who can afford a 3.5 percent down payment (even with family help) can become a homeowner.

PLEASE NOTE: FHA market share has grown roughly tenfold in the past year to an estimated 30 percent of new mortgage originations.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.2 million members involved in all aspects of the residential and commercial real estate industries.
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There are still programs out there if you have excellent credit that will add up to a 100% loan, but as at anytime they are riskier and more expensive. The only 100% financing program I would recommend is if you can qualify for a VA loan, which means you must have served active duty in the military or during war time as a part of the reserves. For more information regarding all of the details of qualifying for an FHA, VA, or conforming loan please contact me at mrouse@intracoastalrealty.com and will will be happy to put you in direct contact with an appropriate lender for your personal needs.