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Depends where you live I suppose. I am in Australia where typically you need 20%. At 10% you need to purchase special insurance or get a guarantor. I am surpri

Depends where you live I suppose. I am in Australia where typically you need 20%. At 10% you need to purchase special insurance or get a guarantor. I am surprised at how crazy low those US ratios are. Thats just bonkers.

ghaff 5y ago
Those down payments used to be the standard in the US. However, I am surprised that, indeed, median down payments do seem to be significantly below that these days.
- to11mtm 5y ago
  There's a few contributing factors to down payments being lower. Like with FHA loans, you can have a very minimal down payment, however unlike a conventional loan, the 'MIP' (the insurance comparable to a Conventional's PMI) will never go away on a new FHA loan if your original down payment was less than 10%. So, what a lot of people do is either just eat that extra cost (for lower cost homes, it more or less comes out to the equivalent of an additional 0.8-1%) for the life of the loan, or refinance out to a conventional loan once they're below 80% LTV. There is also the shady case of the 80/20 Mortgage. Basically, you take out one 'primary' mortgage for 80% of the home's value, and then a second mortgage or HELOC on 20% of the rest. This can in some cases be cheaper, but arguably goes against the whole spirit of PMI in the first place. (Not saying I don't have issues with the way PMI/MIP works...)
ChrisLomont 5y ago
Australia lets people get 5% down houses regularly. And in the US, below 20% you get an extra insurance called PMI. Sounds like the two countries work the same because money works the same.
nly 5y ago
Yeah it seems like in America you can still put almost nothing,.or like 5% down and get a crazy low interest rate mortgage for 25 years. Here in the UK you can't even get fixed rate mortgages of more than 10 years and all of those require substantial deposits. >20% down is where the best interest rates are. Most people are on variable rate deals or short term (2 year) fixed deals.

ghaff 5y ago

Those down payments used to be the standard in the US. However, I am surprised that, indeed, median down payments do seem to be significantly below that these days.

to11mtm 5y ago
There's a few contributing factors to down payments being lower. Like with FHA loans, you can have a very minimal down payment, however unlike a conventional loan, the 'MIP' (the insurance comparable to a Conventional's PMI) will never go away on a new FHA loan if your original down payment was less than 10%. So, what a lot of people do is either just eat that extra cost (for lower cost homes, it more or less comes out to the equivalent of an additional 0.8-1%) for the life of the loan, or refinance out to a conventional loan once they're below 80% LTV. There is also the shady case of the 80/20 Mortgage. Basically, you take out one 'primary' mortgage for 80% of the home's value, and then a second mortgage or HELOC on 20% of the rest. This can in some cases be cheaper, but arguably goes against the whole spirit of PMI in the first place. (Not saying I don't have issues with the way PMI/MIP works...)

ChrisLomont 5y ago

Australia lets people get 5% down houses regularly. And in the US, below 20% you get an extra insurance called PMI. Sounds like the two countries work the same because money works the same.

nly 5y ago

Yeah it seems like in America you can still put almost nothing,.or like 5% down and get a crazy low interest rate mortgage for 25 years. Here in the UK you can't even get fixed rate mortgages of more than 10 years and all of those require substantial deposits. >20% down is where the best interest rates are. Most people are on variable rate deals or short term (2 year) fixed deals.