They’re back … but much safer and a lot more affordable!

Definitionally, a down payment is part of the full price paid at the time of purchase and represents the buyer’s contributed equity (stake in the transaction, skin in the game). In real estate transactions the balance is typically financed by a mortgage lending entity.

In the 50s, 60s, 70s, and 80s a 20% down payment was the norm. With the advent of mortgage insurance (mortgage insurance is paid for by the borrower and indemnifies the lender in case the borrower defaults on the loan) lower down payments became available. We began to see 10% down products, 5% down products and 3% down products. Around the mid 90s loans requiring NO down payment (100% financing) were introduced.

However, with the sub-prime crisis and accompanying upheaval in the marketplace most no down payment loans were eliminated, and for the most part we returned to the 3.5% – 10% down products.

In the latter portion of 2014 mortgage lenders started to loosen the credit guidelines. Here’s what we have in terms of down payment requirements today :

VA & CalVet offer loans that require a 0% down payment.

CHF Access (in conjunction with FHA) offers a 1% down payment loan product, consisting of a 96% LTV 1st FHA loan and a 3% 2nd CHF Access Loan, totaling a Combined Loan-To-Value (CLTV) of 99% – hence 1% down.

Fannie Mae & Freddie Mac now offer 3% down payment conventional loans.

FHA requires a 3.5% down payment.

CalHFA offers a purchase money loan that requires a 5% down payment.

If you are a first time buyer with little or nothing to put down, don’t be discouraged. There’s a loan product in the marketplace that will comfortably and safely get you into a home. We’ll help you find it!