Facts About Down Payments

The facts about down payments. Responding to misinformation in the media and blogs recently about the required size of a down payment for a mortgage in today’s market, NAR issued these facts:

• An individual may be required to put down 20 percent based on that person’s financial situation, but that is not an across-the-board requirement for all borrowers.

• A borrower who puts down less than 20 percent is required to obtain mortgage insurance.

• Even in a declining market, a borrower is required to make at least a 5 or 10 percent down payment.

• FHA requires a 3.5 percent down payment by borrowers, so long as they meet a 31 percent housing cost-to-income ratio. In other words, anyone who stays within their budget and who can afford a 3.5 percent down payment (even with family help) can become a homeowner.