Do I need 20% down to buy a house?

The answer is no, it’s a myth. Many years ago the standard was 20% down but that’s changed over decades of different types of financing. You can buy a house now with as little as 3% down. The most common is a 3.5% FHA loan. But all of this comes down to what you qualify for based on your credit score, income and everything else that they look at.

The next question then is always well if I don’t have to put 20% down to buy a house why would I? Well, there are three really important factors to consider when you’re purchasing a home and how much you’re going to put down. If you’re in a multiple offer situation, the buyer who has more down always looks like a stronger buyer because they have more skin in the game. It can give you an advantage,

20% down you’re considered to have enough equity in your property that most lenders will not ask you or require you to pay PMI which is private mortgage insurance period it’s not a huge amount of money but it’ll save you anywhere between $50.00 to maybe $100 a month your house payment period some people may pay more depending again on your situation.

Lastly, a lot of lending institutions if you’re putting 20% down would give an appraisal waiver. What that essentially means is they will just look at the comparable sold homes and the activity in the area and give your purchase an appraisal value of the purchase price without having to go through the standard appraisal. The standard appraisal requires an appraiser to literally go into the property take photos, measurements and everything else. Then go back and do a full blown analysis of the property.

If you can skip that step, not only does it make it easier for you with your loan but the sellers like it because it’s less likely that there will be an appraisal issue moving forward. Sellers want you to have a home inspection and they want everything to be right. But if you can give them a little bit more confidence that your purchase agreement will go smoother than your competitors, it always puts you in a better position.

This is just a quick look inside the possibility of not having to put down 20% for the purchase of the home. There’s so much more that goes into it than what I shared with you today. Please reach out to me and I’ll be more than happy to have a conversation with you and answer any questions that you have.