In Part I of the Home Buyer Guide to Portland Real Estate, I wrote about the general process. This article is a little more specific and we’ll discuss the down payment.
Keep in mind that in Part I it was stressed of the importance to initiate a talk / set up a consultation with a loan originator, lender. This does not mean you shouldn’t know about the down payment, which is a very important part of a real estate purchase. Your lender will ask you about your down payment and with that conversation, they may help you determine which loan product is the best for you, and your current financial situation.
If you are not paying with cash, you will have to borrow funds, i.e., obtain a loan and have a mortgage. This home buyer guide to Portland Real Estate is about buyers who will finance and need a down payment.
Do Down Payments Vary?
Down payments vary depending on the type of loan the buyer is qualified for, and might be interested in. Here are the most typical types of loans and with EACH loan, there are down payment requirements:
- Conventional Loan — usually requires a 10% down payment. The 10% down payment is based on the final sales price of the home. But, you can measure it, roughly, with the current list price. I mention this, because the list price MAY NOT BE what I am able to negotiate for my client. [EXAMPLE: List Price: $240,000. Offer: $235,000 (accepted) = $23,500 down payment.] NOTE: There are some conventional loans products that require a 3% down payment.
- FHA Loan — there is a 3.5% down payment requirement. The FHA loan is administered by HUD. The Federal government DOES NOT LOAN MONEY! They will only “guarantee” the borrower’s loan, which is enticing to lenders.
- VA Loan — this is a 0% down payment program offered to Veteran’s
With EACH loan, there are specific requirements. Your loan officer will discuss these requirements in more detail with you. I can talk about them too, so please feel free to ask me. Although I am not a lender, I do know “of” the loan programs and some of the requirements. But, your best bet is to find a competent lender who will explain the differences to you, and what makes the most
cents sense to your particular situation.
Related Article: Home Buyer Guide to Portland Real Estate Part I: The General Process
Gone Are the Days of the 80/20 Loan
I’ve been an Exclusive Buyers Agent in the Portland Metro area for close to 15 years . . . and I’ve work in many markets. There used to be a time . . . and thankfully it’s over . . . where buyers could borrow 80% of their loan amount AND take a second mortgage for the remaining 20%. Basically, this was a 0% down payment set up. With loose lending guidelines, buyers were doing this type of loan and then would refinance. It was a terrible way to buy a home and I’m glad this type of loan is no longer available.
In Part III of the Home Buyer Guide to Portland Real Estate I will talk about How and Where to Get Down Payment
The Home Buyer Guide to Portland Real Estate Series:
- Part I – The General Process
- Part II – The Down Payment
- Part III — Where and How to Get Your Down Payment
- Part IV —
- Part V —
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Buyers Agent Portland, LLC is an Exclusive Buyer Agency serving the Portland Metro real estate market since 1999. The brokerage only represents Home Buyers and never home sellers. If you’re looking for a home anywhere in the Portland Metro area, there is no better representation than an Exclusive Buyers Agent. We assist investors, folks relocating to Portland area, those moving to Portland in-state, home buyers who are looking to down-size or move-up and of course . . . love working with first-time buyers. I help Buyers in the Portland Metro market find exactly what they need in the Tri-County markets of Clackamas County, Multnomah County and Washington County, as well Portland cities including but not limited to:
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