Traditional purchases with Down Payments

First time home buyers have always looked at putting some range of a down payment on a home. These down payments can range from as little as 3% up to the traditional 20%. The twenty percent down payment was always the standard, in this scenario you would walk in owning a good portion of the home, avoid paying PMI (private mortgage insurance), and finally the best rates are available at 80% loan to value or lower.

So depending on what size of a down payment you are able to afford that will dictate which home mortgage loans or programs are suitable for you. Here is a list of the different ranges of down payments and the programs you should look at.

3% Down Payment.

This scenario you would be looking at obtaining a 97% FHA loan. This is one loan involving PMI and is extremely popular with first time buyers.

5% to 20% Down Payments.

Typically down payments will be a multiple of 5% (i.e. 5, 10, 15, and 20). Depending on the amount you can obtain either 1 or 2 loans to complete the financing. For instance, if you put 10% down and were to obtain 2 loans you would apply for an 80/10 piggyback loan. The other alternative is securing a single loan for the difference and pay monthly PMI.

The ideal situation for a new home owner would be to have the necessary 20% down payment. However with the current value of homes it is extremely difficult to save even a 5% down payment. That is why 100% financing has become so popular. Just remember there are many products and programs available for a first time home buyer it all comes down to the payments per month and if you can afford them. You do not want to enter into such a large obligation and not be able to make the payments each month.

Traditional purchases with Down Payments

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