Ask the Agent: Down Payments

by Dan Lesniak

Hey, it’s Dan Lesniak here with a new “Ask the Real Estate Agent” segment.

In today’s episode I will be talking about down payments, the different types and their requirements.

Generally it depends on your situation, but it’s important to know you definitely do not need 20% down payment. I know a lot of people think that it stems from how it was decades ago, but nowadays there are programs ranging anywhere from 0% up to 20% and above.

Here are some examples of types of down payments:

  •  0%
    • VA loan & benefits: if you’re a veteran you can get 0% down payment through a VA loan or if you’re eligible for VA benefits. It’s a great program, offering super rates to veterans.
    • VHDA in Virginia and the “DC Opens Doors” program in D.C also offer excellent options if you qualify.
  • >5%
    • Conventional program, where you can get in for as low as 3%.
    • 3.5% down payment via FHA.
  • 5% to 15%
    • Taking out 2 loans – primary loan taken out at 80% with standard interest, and then second loan taken at a higher interest rate to cover the remaining gap between your down payment and the 20%
      • Key benefit for this is if you’re expecting a large sum of money from the sale of stock/gift/commission, you can quickly pay off that second loan with the higher interest rate.
    • Mortgage insurance:
      • Paid monthly – you have one loan for 85% (up to 95%), and can pay a higher monthly payment because you have mortgage insurance
      • Lender paid mortgage insurance, where the lender pays it upfront for you and you get a slightly higher interest rate.

These are just a few of the different types of loan programs out there. Once you can get to 20% you’re gonna have more options, bigger loan amounts, and better interest rates. The higher the down payment the greater optionality.

If you have any more questions, we’d love to help you out. Please send us your questions, and we may feature it on the next Ask the Agent segment!

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