According to the National Association of Reators (NAR), “there is some misinformation in the media lately about the required size of a down payment for a mortgage in today’s market, and the blog world is abuzz with misperceptions. Not all so-called experts are knowledgeable in this area, and some experts are being misunderstood.”

The facts:

1. An individual may be required to put down 20 percent based on that person’s financial situation and the type of occupancy they are trying to achieve with a purchase or refinance (i.e. a primary residence versus a second home or investment property). But that is not an across-the-board requirement for all borrowers.
2. A borrower who puts down less than 20 percent is required to obtain mortgage insurance which is the same as it has always been.
3. Particularly in a declining market such as the one we have been in nationally since late 2006, a borrower is required in many circumstances to make at least a 5 or 10 percent down payment.
4. FHA may only require a 3.5 percent down payment by borrowers, as long as they meet a 30 percent housing cost-to-income ratio. This means that anyone who stays within their budget and who can afford a 3.5 percent down payment (even with a loan from a family member) can purchase a home.

FHA (Federal Housing Administration) market share has grown roughly in the past year to roughly 30 percent of new mortgage originations.  To find more information about FHA Loans, including how to find an FHA Lender, need advice from a HUD approved housing counselor, or to find an FHA program near you please click on the link!