Do You Have Enough For A Down Payment?

I attended a meeting at my office yesterday and listened while a highly experienced loan officer gave us an update on the current mortgage situation. It was a mixed bag, really, and the bottom line message was that being able to obtain a mortgage to buy a house isn't that easy anymore.

Because of the downturn in the housing market mortgage insurers are no longer insuring 100% mortgages which means that lenders will no longer offer them. This means that home buyers will need a minimum of 5% down and, more likely, 10% down in order to qualify for a mortgage. So, for a modest $300,000 home in the Hollywood section of College Park you'll need somewhere between $15,000 and $30,000 in order to buy the house.

The alternative is FHA financing which only requires 3% (which is still $9,000). There are ways to have the Seller provide a gift of the down payment through down payment assistance programs like Nehemiah. A lot of Sellers are doing that very thing. Yet, you can't depend on it with every Seller.

Here's what the end of 100% financing means. There will be fewer Buyers in the market place attempting to buy homes because they flat out don't have the money for the down payment. That, in turn, means Sellers will have to wait longer to find a good, qualified Buyer.