Many homebuyers are surprised to learn that qualified buyers may be able to purchase a home with as little as 3% down. Here’s what buyers in Oregon and Washington should know.
Many homebuyers believe they need a 20% down payment before they can purchase a home. That simply isn’t always the case.
Qualified buyers may have conventional financing options that allow as little as 3% down, and depending on the loan program and borrower qualifications, gift funds or other eligible sources may be available to help with the down payment.
As a mortgage broker since 1990, I’ve helped buyers through many different housing markets, and one of the most important things I’ve learned is that buyers shouldn’t assume they don’t qualify before exploring their options.
If you’re considering buying a home in Oregon or Washington, understanding the financing options available to you is a great place to start.
How Does 3% Down Work?
Some conventional loan programs allow qualified buyers to purchase a primary residence with as little as 3% down. And 3% down isn’t limited to lower-priced homes.
Some lenders are currently offering conventional loan amounts up to $845,000, with as little as 3% down for qualified borrowers. That could mean a purchase price of approximately $871,000 with 3% down.
Many buyers are surprised by this. You don’t necessarily need a 20% down payment—or even 10% down—to purchase a higher-priced home.
Your available loan amount, down payment, mortgage insurance, income, credit, property type, and other qualification requirements will determine which financing options are available to you.
Do I Have to Use My Own Money for the Down Payment?
Not necessarily.
Depending on the loan program and your individual circumstances, gift funds from an eligible donor may be allowed for some or all of the down payment and closing costs.
There may also be down payment assistance programs available to qualified buyers.
This is one reason I recommend looking at your financing options before assuming you need to save a certain amount of money before buying a home.
What About Mortgage Insurance?
When you put less than 20% down on a conventional mortgage, private mortgage insurance (PMI) is generally required.
The cost of PMI can vary based on factors such as your credit profile, loan amount, down payment, and other loan characteristics.
PMI isn’t necessarily a reason to wait to buy. I can compare different down payment options with you so you can see the estimated monthly payment and determine what makes the most sense for your situation.
You May Need Less Cash Than You Think
Your down payment isn’t the only part of the transaction we can plan for.
Depending on the purchase and market conditions, there may be opportunities to use seller concessions toward eligible closing costs, which can potentially reduce the amount of cash you need at closing.
Instead of simply asking, “How much money do I need to put down?” I like to look at the entire transaction—including the purchase price, down payment, closing costs, available seller concessions, interest rate, mortgage insurance, and monthly payment.
The goal is to find the financing structure that makes the most sense for you.
Start With the Numbers
Before deciding that homeownership is out of reach, let’s look at the actual numbers.
A mortgage preapproval can help you understand your potential:
Purchase price
Loan amount
Down payment
Estimated monthly payment
Closing costs
Funds needed to close
Every buyer’s situation is different, and loan programs have specific eligibility requirements. The best place to start is by reviewing your individual financial picture and the mortgage options available to you.
Ready to Explore Your Mortgage Options?
Whether you’re buying your first home, moving up, refinancing, or simply want to know what you may qualify for, I’m happy to help you explore your options.
I work with homebuyers and homeowners throughout Oregon and Washington.
Lori Manley | Mortgage Options 4 You LLC
Mortgage Broker Since 1990 | NMLS #120072 | Licensed in Oregon & Washington
Call or Text: (503) 989-8668
Email: Lori@MortgageOptions4You.com
Website: MortgageOptions4You.com
Turning “someday” into “closing day.”
Loan programs, loan limits, interest rates, and eligibility requirements are subject to change. All financing is subject to borrower and property qualification.
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