Sonoma County Mortgages

All financing provided by New American Funding

(707) 217-4000 | Prequalify Now
  • Home
  • Purchase
    • How Much Down Payment To Buy A Home?
    • How Much Income You Need To Buy A Home
    • How Much Should I Save For Buying A Home?
      • How Rates Affect Payment
    • No PMI Mortgages
    • FHA Loans
    • Sonoma County Disaster Loans
    • Jumbo Loans
  • Refinance
    • Mortgage Rates
    • Does It Make Sense To Refinance?
      • Get Your Refi Paperwork In Order
    • How To Pay Off Your Loan Faster
    • How To Remove PMI
    • How Lenders Price & Quote Loans
  • Loan Programs
  • Payment Calculator
    • Mortgage Affordability Calculator
  • Blog
  • Videos
  • Scott Sheldon
    • Scott Sheldon
      Senior Loan Officer
      NMLS ID# 287389
      Direct: 707 217-4000
      Scott.Sheldon@nafinc.com
      Specializing in Residential Home Loans for Primary Residences, Second Homes, Investment Properties, Single Family Homes, Condos, PUDs, 1-4 Units.

Get Your Latest Rate Quote Now!

How Much Skin In The Game To Buy A House

August 17, 2014 by Scott Sheldon

Share on Facebook
Facebook
Tweet about this on Twitter
Twitter
Share on LinkedIn
Linkedin
Pin on Pinterest
Pinterest
Email this to someone
email
Print this page
Print
first time home buyer researching

Looking to get your foot in the door? If you’re tired of paying someone else’s mortgage, now may be the time to pursue the American dream of homeownership. In fact, you need not put down 20% either. Those days are long gone. While you can always elect to put down the full 20% or more, many alternatives are available. What you want to know if buying a house is in your financial future…

Needing 20% Down Is A Myth

It is known within every real estate community that 20% down is the benchmark down payment for looking strong on paper. While this remains by general consensus, as the standard for financial strength, it is by no means a requirement nor expected.

Remember your purchase offer amount drives negotiation. How strong you are on paper does help, but when you make an offer to buy a home, the seller of the property has no idea of your financial strength other than what your real estate agent tells them and what’s on your pre-approval letter. The price dictates whether you’re in the game or whether you’ll continue to be on the search.

Realistic Mortgage Lending Options That Create A “Sold” House

3.5% down

The minimum down payment you’ll need to get your foot in the door is a least 3.5% down. Most lenders can lend up to $417,000 with the exception of Alaska, Hawaii and Guam.

In some more affluent markets, the higher loan amounts (per county)  allow someone with strong income and less cash to still get into the market.

5% down

Another popular choice amongst buyers is to consider using a conventional loan with 5% down. Same loan size amounts up to $417,000 with the exception of Alaska Hawaii and Guam going as high as 417,000 with as little as 5% down. An alternative to the higher-priced FHA Loan, the Conventional Loan allows for getting rid of the PMI after accumulating 20% equity after a minimum of 24 months whereas the FHA loan, any monthly mortgage insurance associated with the house payment is actually permanent (assuming 3.5% down).

0% down

Two options exist for this type of financing, one being a purchase money money financing through the US Department of Veterans Affairs. The program allows a veteran to purchase a house for literally no money down. Yep, the purchase price and loan amount are equal.

The caveat? Well there’s actually two, program is for military veterans only and the home must pass a clear pest report. This option could be optimal for brand-new construction or for property where any pest damage can be fixed by closing.

An alternative to this program is a loan guaranteed by the US Department of Agriculture, USDA. You need not be a veteran for this particular loan, however you can only purchase in an areas characterized less dense by the USDA.

In some areas, you may not be eligible to use the program due tighter qualifying income to payment ratios and location. The program works for homes designated rural by USDA only. Additional income limitations also apply. For example for nuclear family of four, a household income cannot exceed $96,400 per year.

All of these options allow for the use of gift funds. Family members, cousins, relatives are all excellent sources to tap for possible down payment or closing costs (usually about 2% of the home price). Even if you already own the home are looking to upgrade all of these programs could present a viable auction to bridging the gap between buying a home for the right price in the right area of vs. continuing to be on the search.

Loan  To Values A Factor When Getting Pre-Approved

Mortgage Tip: The smaller the loan size you can qualify for the more challenging it will be to actually close escrow on your first home. Buying power is important especially in negotiating situations in competitive markets. Pure and simple, the bigger the loan size the more opportunity.

*Conventional Conforming -can go to 95% financing up to $417,000 and 90% financing up to the maximum conforming loan limit in the county in which the property is located. For example in Sonoma County, CA the maximum high balance loan limit is $520,950. A loan exceeding $417k to $520,950 would require a 10% down payment.

*VA -allow for 100% financing all the way through the maximum conforming loan limit in the county in which the property is located and can go bigger than the max conforming loan limit. Here’s how… the buyer would need to put in $25 for every dollar over the max county loan limit to their purchase price. For example with a $520,950 loan (max county loan limit mount) with a purchase price of $700k. Buyer puts in $44,726, 25% of the $179,050 -difference of $520,950 and $700k.

*USDA -allow for financing up to $417,000, but the kicker is this, in order to support a purchase price of $417,000, a buyer would need income to at $95,000 getting very close to the maximum income limitation at $96,400 just to be able to cut the mustard. More importantly, lending qualifying ratios are more stringent on this program than any other program with ratios being 29/31. Meaning proposed house payment before debts cannot be more than 29% of the gross monthly income and the house payment plus other debts cannot be bigger than 31% of the monthly pre-tax income.

*FHA loans-allow for up to 3% down payment up to the maximum conforming loan limit in the county in which the property is located

*Jumbos-usually can go as high as $750,000 with as little as 10% down

Remember when putting less than 20% down monthly property taxes and fire insurance turns will be required to be built into your monthly mortgage payment and there is a strong propensity of needing private mortgage insurance. Some lenders might offer an alternative option called lender paid mortgage insurance where the lender actually pays the monthly PMI despite not using 20% down to purchase a home, so make sure to do your homework.

Looking to buy a home in the near future? Let us give you a free mortgage rate quote!

Related Mortgage Advice from Scott Sheldon

  • Quick Calculation For Determining House Payment

    As consumer taking out a mortgage loan, computing a house payment can be a time-consuming…

  • How To Buy A Home Without 20% Down And No Mortgage Insurance

    The days of needing 20% down to buy a home are long gone. To compensate,…

  • 6 Reasons To Buy Income Property Now!

    This real estate market is continuing to produce many fantastic opportunities including a very make…

  • How To Avoid Monthly PMI With Less Than 20% Down

    Buying a primary home?  The 20% down rule is yesterday's news. More down payment options…

Filed Under: First Time Home Buyers, Pre-Approval

Latest Video Tips

sonomacountymortgage

We are looking for an experienced, energetic, fun ...

Feb 6

Open
We are looking for an experienced, energetic, fun and dynamic individual to join our Santa Rosa Branch for New American Funding.

This person would be have specific recent mortgage experience, know the loan business including guidelines and be willing to go the explore mile. If you know someone like that please feel free to message me.

@nafmidpacificregion
@stylemyheart @newamericanfunding #talent #hiring #fun #talent #looking #team #crew #building #family #santarosa #sonomacounty

We are looking for an experienced, energetic, fun and dynamic individual to join our Santa Rosa Branch for New American Funding.

This person would be have specific recent mortgage experience, know the loan business including guidelines and be willing to go the explore mile. If you know someone like that please feel free to message me.

@nafmidpacificregion
@stylemyheart @newamericanfunding #talent #hiring #fun #talent #looking #team #crew #building #family #santarosa #sonomacounty
...

sonomacountymortgage

Every family we meet with gets this super handy ...

Jan 30

Open
Every family we meet with gets this super handy packet. We like families to have something tangible when it comes to financing a home. You won't find this type of service with a Rock Loan company or an internet lender...🤔 @nafmidpacificregion @nikki___perfectly_imperfect83_ @_gorjessxo #family #team #value #rates #mortgage #goals #homes #realestate

Every family we meet with gets this super handy packet. We like families to have something tangible when it comes to financing a home. You won't find this type of service with a Rock Loan company or an internet lender...🤔 @nafmidpacificregion @nikki___perfectly_imperfect83_ @_gorjessxo #family #team #value #rates #mortgage #goals #homes #realestate ...

sonomacountymortgage

My little sweet pea loved the award dad earned for...

Jan 18

Open
My little sweet pea loved the award dad earned for having a record year. #families 
#mortgage #kids #family #team #goals #success #year #2019 
@nikki___perfectly_imperfect83_ @_gorjessxo @nafmidpacificregion @nafsantarosa @tinalsheldon

My little sweet pea loved the award dad earned for having a record year. #families
#mortgage #kids #family #team #goals #success #year #2019
@nikki___perfectly_imperfect83_ @_gorjessxo @nafmidpacificregion @nafsantarosa @tinalsheldon
...

Popular Posts

Why your income is your lifeline to finance a home

Why your income is your lifeline to finance a home

Filed Under: Credit Score Questions and Answers, Economic News, First Time Home Buyers, Jumbo Loans, Loan Programs, Loan Qualifying, Mortgage Shopping, Mortgage Tips & Advice, Popular

2020 Conforming Loan Limits Increaase

New loan limits for 2020 makes getting a mortgage easier

Filed Under: Economic News, First Time Home Buyers, Interest Rates, Mortgage Shopping, Mortgage Tips & Advice, Popular, Pre-Approval

Why the purchase price in a real estate transaction should not be the single most important factor

Why the purchase price should not be the single most important factor

Filed Under: Credit Score Info, Economic News, First Time Home Buyers, Interest Rates, Invesment Properties/Second Homes, Jumbo Loans, Loan Programs, Loan Qualifying, Mortgage Shopping, Mortgage Tips & Advice

How to avoid getting a jumbo loan due to Coronavirus

Here are 2 mortgage process problems you will want to avoid

Filed Under: Credit Score Questions and Answers, Interest Rates, Loan Programs, Loan Qualifying, Mortgage Shopping, Mortgage Tips & Advice, Popular, Pre-Approval, Purchase Mortgage Loans Questions and Answers

Self Employed Borrowers

Here is a legit non-traditional income program for self-employed mortgage borrowers

Filed Under: Credit Score Info, Economic News, First Time Home Buyers, Interest Rates, Loan Programs, Loan Qualifying, Mortgage Shopping, Mortgage Tips & Advice

How to use seller carry financing to purchase a house with less cash down

Should you buy & build or buy a single family home?

Filed Under: First Time Home Buyers, Interest Rates, Loan Programs, Loan Qualifying, Mortgage Shopping, Mortgage Tips & Advice, Pre-Approval

SCM on Zillow

Zillow Reviews for Scott Sheldon, New American Funding

SCM on Facebook

SonomaCountyMortgages.com

Location & Contact

Scott Sheldon, Senior Loan Officer
NMLS ID# 287389
1450 Neotomas Ave Suite 115
Santa Rosa, CA 95405
1-707-217-4000
Email Us!

Copyright 2021 SonomaCountyMortgages.com · About Us · Sonoma County Loans · Privacy Policy · Terms Of Use · Legal · Site Map

NMLS Consumer Access © New American Funding. All rights Reserved. NMLS ID#6606.
Corporate Office 14511 Myford Road, Suite 100, Tustin, CA 92780. We at New American Funding take great pride in our customer service and make it our number one priority. We encourage you to contact us for complaint resolution or any post-closing questions you may have regarding the servicing of your loan. We strive to have your experience with New American Funding a stellar one. In the rare case that our service did not meet your expectations, please call our customer care hotline at 1-800- 450-2010, ext. 7100 or you may contact us by email customerservice@nafinc.com. Please leave a detailed message and we will follow up with you no later than the end of the next business day. If you are using a screen reader or other auxiliary aid and are having problems using this website, please call 800-450-2010 Ext. 7100 for assistance.

State Licensing | Privacy | Terms of Use | Electronic Consent Agreement

Connect With Scott In Your Inbox

Looking for a home? Real estate insider? Get connected with Senior Loan Officer Scott Sheldon. Scott stays updated on the latest in the mortgage industry, so you can stay updated with him!