4 ms·

Not really. You can get an FHA loan with only 3% down.

locusofself 5y ago
but your offer will never be accepted. someone will offer more down, conventional, or even multiple cash offers. especially for homes in the starter price range.
- gizmo686 5y ago
  The seller doesn't care about how much you put down. Cash offers will beat a comparable offer with a mortgage contingency. At the margin, sellers may compare equivelent offers based on how likely they think the mortgage is to be approved; but most buyers are pre-approved regardless of down payment or mortgage type, so this wouldn't be that significant of a factor. The bigger factor sellers look at is how much money you offer them. At 20% on a conventional, you may be able to get your lender to wave the appraisal requirement, which would be a help if you try offering much over the list price (unless you also have the cash to make up the difference, which if you need the 3% down payment, you probably dont).
  - seanmcdirmid 5y ago
    Sellers care about down payments in so much as they can gauge how serious you are about closing successfully. Everything else being equal (if the bids are the same, if not it doesn’t matter).
  - locusofself 5y ago
    FHA loans are less attractive to a seller than an equal conventional loan because they have stricter inspection and appraisal requirements.
- Beached 5y ago
  you can do conventional with only 3% too. your down payment has no affect on the offer chosen, the seller doesn't even get to know.
  - ganoushoreilly 5y ago
    Some markets have home buyers picked based on earnest and Diligence monies. Usually these are applied to closing / down payment. In those instances it’s clearer.
  - locusofself 5y ago
    I sold a house last year in Washington and I saw the down payment amounts in the offers I received.
  - gamechangr 5y ago
    That's for sure not accurate. Sorry friend. The seller both sees your down payment and it also affects which offer is chosen. Let me give an example to explain why they see it and why it's important. let's say that the agreed contract says that the buyer and seller agree to pay $600,000 for the house. Let's pretend that you have 10% down or $60,000 down. You need a loan for $540,000 The loan requires an appraisal to make sure that the bank (the loan) is a safe investment. The bank/loan only agrees to lend you the amount the house appraises at. Back to the example and the appraiser comes out and says that the house is worth $500,000. In this case, again the signed offer says $600,000 with a $60,000 deposit. The buyer either has to bring $100,000 to the table or the seller has to agree to make less money than the original offer (or some combination of the two) , but the bank will only give $500,000. So if a buyer had a $100,000 downpayment and offered $600,000 and a second buyer offered $600,000 as well but only had $60,000, the seller would most likely choose the offer with more money down. it would be more likely to close. Hope that helps
- notfromhere 5y ago
  You can get a conventional mortgage for 3.5%
JetAlone 5y ago
From reaching up to a 3% down payment, one owes and pays interest on 32 times their former net worth, for a home they are highly committed to. Paying it off may require an entire lifetime of work and obedience. Attempting to move will require the expensive and/or time consuming effort to find a buyer. I don't want to just be a complainer about it, sometimes life simply is that difficult, but it bears cognizance that this is an exceptionally tough spot to be in with or without access to debt.
dendriti 5y ago
How do loans help when desirable properties are selling for 10-15% above asking price in cash?
georgyo 5y ago
While technically possibly, it's harder in practice. And while talked about less, there are many other upfront costs than just the down payment; there are so many fees to actually close on a home. And in warm markets (for get about hot markets like NY and SF), even an offer with 20% down is not pleasing to the seller. 20% or less down means that if the bank under appriases for whatever reason would cause a massive delay and/or cause the deal to fail. For the buyer, many costs at this point or unrecoverable. Inspecting, lawyers, etc. This is a huge hit to a low income person.
- notfromhere 5y ago
  It's not technically possible, it's pretty readily available. A real estate lawyer for a simple transaction is like 500 dollars, same with a basic inspection. You don't need the lawyer unless your offer is accepted. In a warm/hot market, anyone with a mortgage is going to lose to someone with cash, so not really an issue. Anecdotally from friends buying their first homes, very few to zero of them put down anywhere near 20%.

but your offer will never be accepted. someone will offer more down, conventional, or even multiple cash offers. especially for homes in the starter price range.

gizmo686 5y ago
The seller doesn't care about how much you put down. Cash offers will beat a comparable offer with a mortgage contingency. At the margin, sellers may compare equivelent offers based on how likely they think the mortgage is to be approved; but most buyers are pre-approved regardless of down payment or mortgage type, so this wouldn't be that significant of a factor. The bigger factor sellers look at is how much money you offer them. At 20% on a conventional, you may be able to get your lender to wave the appraisal requirement, which would be a help if you try offering much over the list price (unless you also have the cash to make up the difference, which if you need the 3% down payment, you probably dont).
- seanmcdirmid 5y ago
  Sellers care about down payments in so much as they can gauge how serious you are about closing successfully. Everything else being equal (if the bids are the same, if not it doesn’t matter).
- locusofself 5y ago
  FHA loans are less attractive to a seller than an equal conventional loan because they have stricter inspection and appraisal requirements.
Beached 5y ago
you can do conventional with only 3% too. your down payment has no affect on the offer chosen, the seller doesn't even get to know.
- ganoushoreilly 5y ago
  Some markets have home buyers picked based on earnest and Diligence monies. Usually these are applied to closing / down payment. In those instances it’s clearer.
- locusofself 5y ago
  I sold a house last year in Washington and I saw the down payment amounts in the offers I received.
- gamechangr 5y ago
  That's for sure not accurate. Sorry friend. The seller both sees your down payment and it also affects which offer is chosen. Let me give an example to explain why they see it and why it's important. let's say that the agreed contract says that the buyer and seller agree to pay $600,000 for the house. Let's pretend that you have 10% down or $60,000 down. You need a loan for $540,000 The loan requires an appraisal to make sure that the bank (the loan) is a safe investment. The bank/loan only agrees to lend you the amount the house appraises at. Back to the example and the appraiser comes out and says that the house is worth $500,000. In this case, again the signed offer says $600,000 with a $60,000 deposit. The buyer either has to bring $100,000 to the table or the seller has to agree to make less money than the original offer (or some combination of the two) , but the bank will only give $500,000. So if a buyer had a $100,000 downpayment and offered $600,000 and a second buyer offered $600,000 as well but only had $60,000, the seller would most likely choose the offer with more money down. it would be more likely to close. Hope that helps
notfromhere 5y ago
You can get a conventional mortgage for 3.5%

JetAlone 5y ago

From reaching up to a 3% down payment, one owes and pays interest on 32 times their former net worth, for a home they are highly committed to. Paying it off may require an entire lifetime of work and obedience. Attempting to move will require the expensive and/or time consuming effort to find a buyer. I don't want to just be a complainer about it, sometimes life simply is that difficult, but it bears cognizance that this is an exceptionally tough spot to be in with or without access to debt.

dendriti 5y ago

How do loans help when desirable properties are selling for 10-15% above asking price in cash?

georgyo 5y ago

While technically possibly, it's harder in practice. And while talked about less, there are many other upfront costs than just the down payment; there are so many fees to actually close on a home. And in warm markets (for get about hot markets like NY and SF), even an offer with 20% down is not pleasing to the seller. 20% or less down means that if the bank under appriases for whatever reason would cause a massive delay and/or cause the deal to fail. For the buyer, many costs at this point or unrecoverable. Inspecting, lawyers, etc. This is a huge hit to a low income person.

notfromhere 5y ago
It's not technically possible, it's pretty readily available. A real estate lawyer for a simple transaction is like 500 dollars, same with a basic inspection. You don't need the lawyer unless your offer is accepted. In a warm/hot market, anyone with a mortgage is going to lose to someone with cash, so not really an issue. Anecdotally from friends buying their first homes, very few to zero of them put down anywhere near 20%.