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I see that every time I use mortgage calculators or Use Zillow looking for homes, they use 20% as a down payment. Is this the required down payment? I have also read that 10% is enough and some have used 3% as a number. I know a lot depends on credit score etc.... Thoughts?
Depends on the loan type... There are loans that can be zero down. It depends on your situation. I would talk to a local lender. As your realtor who they recommend for you.
For the majority of people, a 3% down conventional is the lowest you can get. 3.5% down for FHA. Obviously, you have to have the credit and income required to qualify.
There are programs for 0% down, but most buyers will not qualify for them because they are for certain buyers and/or locations. The most common of the 0% down loans would be a VA loan.
The reason Zillow defaults to 20% is because 20% is the generally recognized amount for a loan program that allows for the easiest qualifications, best rates and no requirement for Private Mortgage Insurance (PMI). So when you see advertised rates on TV or the internet they are generally based on the 20% DP.
As others have mentioned, there are all kinds of loan programs with down payments from 0%. Each program will have some trade off in cost. It may be higher fees, higher rates, variable rates, etc.
The best way to know what is best for you if to sit down with a qualified Loan Officer that will review your financials, explain which program(s) you qualify for and show you the tradeoffs of using one vs the other. Anything else is simply an advertisement.
If you are a VET you can get no money down financing. Otherwise, your required minimum down payment would be 3% if you went conventional or 3.5 % with an FHA loan.
Any conventional loan with less than 20% down requires MI. An 80/10/10 keeps the 1st loan at 80% of sales price and gives you a 2nd loan at 10% of the sales price, so there is not PMI. And the you put down 10%. Typically, good credit required. You should definitely consider this.
Another option with just 10% down is a single premium MI. Some lenders call it LPMI, for whatever reason, we (CU where I work) call it Borrower paid MI, or BPMI (it's a lower rate). How it works - you pay a slightly higher rate, but there's no PMI. So, say the rate at 0 points is 4% with PMI, the rate without PMI in the payment will be approximately 1/4 to 3/8% higher, or 4.25% to 4.375%. It is not a no PMI loan, the cost of the PMI is in the rate. Many lenders falsely call this a no PMI loan. (If PMI must approve the loan to insure it, there's PMI). The downside of LPMI or BPMI, is when the home has 20% equity, there will be no rate reduction. The single premium for the PMI has been paid. But, when you pay the PMI on a conventional loan in the monthly payment, in most cases, the PMI can be removed when there is sufficient equity and the payment goes down.
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