The Myth of 20% Down
A
s I work through my 22nd year in County market and those buying at the
the Mortgage Business, I see higher end. Jumbo loans lean heavily on
similarities between when I started your reserves after closing and your credit
and today. There is simplicity to the business score. Some have Mortgage Insurance and
now that I remember from my early days. some do not require them. Based on how
Gone are many of the exotic and dangerous values have moved up quickly in our
loans, fixed rate and fixed rate ARM’s market, these loans are becoming more
dominate, and guidelines are built around and more popular.
full documentation and full disclosure.
By Jayson Stebbins
Mortgage Professional
That does not mean that in order to allow for down payments as low as 5%. For
buy a home you have to have 20% down. first time buyers, you may even qualify for
I spoke to a potential buyer who expressed as little as 3% down. These loans require
frustration about missing this window of Mortgage Insurance, but allow for creative
opportunity because they hadn’t saved up options to pay it monthly, or pay it all at
enough to put down 20%. The Myth of once at closing.
20% down can be busted by many loan
Jayson Stebbins is a 22 year
veteran of the Mortgage Banking
industry and an Accredited
Mortgage Professional through the
Mortgage Bankers Association.
He grew up in Morgan Hill and
currently lives in Gilroy. He is
the local Branch Manager of
Guild Mortgage, a 55 year old
Mortgage Banking firm. His office
is in Morgan Hill and serves all
of Santa Clara, San Benito, and
Monterey counties. You can reach
Jayson and his Team at 408-782-
8800 or at www.stebbinsmort-
gageteam.com
Conventional, conforming loans still
Loans backed by the Federal Housing
Administration, or FHA, have a 3.5%
programs out there today.
Just this month, my Team and I helped
minimum down payment requirement. You
some first time buyers into their first do not have to be a first time buyer to access
home using a 5% down program with FHA financing. FHA allows for expanded
Conventional financing, and two Down qualifying ratios and is more lenient on
Payment Assistance programs from the credit scores. FHA has its own Mortgage
state. Their total cost to buy the home was Insurance as opposed to private insurance,
a $3000 out of pocket investment. These and they recently modified the cost to make
stories happen every day, as do loans on it cheaper than it was early last year.
The US Department of Agriculture does
programs listed below.
Remember that if you choose to put loans, and they offer 100% financing. It is
down less than 20%, you are entering into limited to certain counties and cities, and
a loan that could have Mortgage Insurance there are income limitations for those using
requirements. This additional component the USDA loan program.
of the payment is important to consider for
Investors who are buying property will
qualifying purposes, and has rates that vary usually still be required to put down at
by program. least 20%.
What about Jumbo buyers? Currently
The Myth of 20% down should not
there is a program allowing for as little as keep anyone from exploring their options
5% down, and plenty of options with 10% in today’s market of record low rates and
down. This is important for the Santa Clara strong real estate values.
GILROY • MORGAN HILL • SAN MARTIN
JULY/ AUGUST 2015
gmhtoday.com
49