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 Down Payment Percent You Need To Buy A Home

August 27, 2015 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
how to write killer offer letter

Consumers looking into the possibility of buying a home should know you need less money than you think. Here’s the amount of cash you need to buy a home, and what you need to know using as little down as possible…

Cash Needed

Contrary to popular belief, you don’t need 20% down. The minimum down payment you need to buy a home on the broader picture is 3.5% down with an FHA Loan, on a 30 year fixed rate mortgage. This 3.5% down payment is a factor of the home price on a loan size up to the high balance FHA County Loan Limit. For example in Sonoma County, California, means up to $520,950, and in some higher cost areas, such as Marin County or San Francisco County, that number goes up to $625,500 for a single-family residence.

Alternatively, on a Conventional Loan you need only a 5% down payment up to $417,000 loan size. Should your loan size exceed $417,000, another 5% down payment kicks in, for a total of 10% down needed all the way to the maximum County Conforming Loan Limit

What To Know When Buying A Home With Little Down

  • Your mortgage payment will be higher than with more down- these are the three drivers that inflate the payment ….interest rate, larger loan size, as well as possible PMI.
  • You should have manageable monthly debts. The monthly debts including credit cards, car loans, and any form of payment obligations should be manageable in relationship to your income. Your income will need to be relatively high to include the proposed mortgage payment for the purchase price you are seeking as well as being able to cover these other liabilities.

The percentages when buying a home are important to know, but it is significantly easier to work with the monies you have or have access to, than to get wrapped around the axle about down payment percentages. Make no mistake the mortgage company can work this factorization out for you very easily or you can do it yourself. You can take the amount of money you have and divide that number by the purchase prices in your area to determine the exact dollar percentage.

For example let’s say you have $30,000 to spend on buying a home and you know that housing prices in your area are $450,000 that means you have a 6.7% down payment, enough for an FHA Loan. If your loan professional asks you how much money you have to spend on buying a home in terms of your own funds and possible gift funds the answer should be some sort of dollar amount, not “Well how much do I need?” The reason is this. How much you’ll need to buy a home is going to be predicated on the purchase price of the property and is a continual variable until you get into contract. Start with the monies you have. Assuming you have $30,000 to spend on our $450k home example, closing costs on a $450,000 home will easily equate to $10,000, so of the $30,000, $10,000 would come right off the top for closing costs leaving you with $20,000 as a down payment still meeting the cash to close requirements on an FHA loan.

Other No Money Down Options Including The Following:

  • VA- program allows for no money down, 100% financing for US military veterans only
  •  USDA- program also allows for no money down, 100% financing as long as you are purchasing a home in a rural area and you meet USDA’s annual low income thresholds

Alternatively, gift monies can be used to purchase a home with as well. Typically lenders like gift monies to come from some sort of a blood relative, but this is not a broad guideline do check with your individual lender on a specific basis. Additional funds that can be used for the acquisition of a home are:

  • stocks, bonds, IRA and 401(k), monies can be pulled from these accounts to purchase a home usually with special provisions
  • gift money as long as it can be documented in some form of a bank account can also be used along with providing an executed gift letter
  • selling of personal property such as the sale a boat or a motorcycle for example can be used for a down payment and/or closing costs- documented with a bill of sale and paper trailing of the funds
  • security deposit refund on current rental obligation this can also be used, but needs to be planned for on the front end so as to properly communicate time frame expectations with your landlord
  • Tax return refund
  • cash can be used as long as the funds have been seasoned in some form of a bank account for the last 60 days

If want to buy a home or want to get on the path of doing so in the future here are some steps to consider to help meet this goal….

  1. Identify what monies you have in the bank now, and from what sources.
  2. Next, get “read” on what housing prices are like in your area via online research or connecting with a good local real estate agent
  3. Take the amount of cash you have and divide that figure by an estimated sales price range in your area so you can get a feel for how much cash you will need to purchase XYZ home. Closing costs become another crucial factor, but the main goal is determining if you have enough cash to play with. Based upon these action steps, talking with a mortgage lender about getting qualified or how much money you’ll need to save in the longer term picture would be a prudent step in making your home purchase ultimately successful.

Thinking about buying a home? Begin by getting a complementary mortgage rate quote online today !

 

 

 

 

 

 

 

 

Related Mortgage Advice from Scott Sheldon

  • Comparing Mortgage Rates In Sonoma County

    What to look for in comparing mortgage rates in Sonoma County. The Federal Reserve came…

  • Little lending nuances to get a mortgage
    How to figure out closing costs on a mortgage

    Closing costs are a factor you must account for consider when taking out a mortgage…

  • fannie mae debt to income ratio change
    Can You Borrow A Down Payment To Buy A Home ?

    Planning to buy a home sometime soon? If you're working on the down payment, know…

  • Should you go Fha or Conventional?
    Should you go FHA or Conventional?

    FHA loans and conventional loans remain the most popular financing type for today's mortgage borrowers.…

Filed Under: First Time Home Buyers, Loan Qualifying, Mortgage Shopping, Mortgage Tips & Advice Tagged With: buying a house, home buying in Sonoma County, how to buy sonoma county real estate, loan programs, Low Rates, mortgage comparison shopping, Santa Rosa homebuying

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 2019 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!