The Down Payment - How much do you need? In order to avoid paying private mortgage insurance (PMI), you must be able to make a down payment of 20% on the home you are purchasing. Let’s be honest though, unless you just sold a property for a large gain or have recently received an inheritance, who has that kind of money to lay down on a house? The Federal Housing Authority (FHA) offers loans with as little as 3.5 %. In order to do that, they make the mortgage companies charge extra fees to protect themselves from potential defaults. You also will be required to have PMI for the full life of the loan. There are other loans not backed by the FHA that could be an option. If you can put 5% down, you could qualify for a Conventional loan. You won’t avoid PMI, but it disappears immediately when the loan-to-value equals 78 %.
Posted on: Wed, 18 Sep 2013 21:45:36 +0000
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