How much of a down payment is needed to purchase a home?
That depends on the type of financing you are using and if the home you are purchasing is a primary residence or an investment property. Here is a breakdown:
USDA – This is a great financing option as it requires 0 down payment, you can receive up to 6% Seller Assist towards closing costs if the Seller is agreeable and there is no PMI. This loan is restricted to certain areas, Phoenixville not being one of them. If you are interested in this type of loan contact a Realtor and/or Direct Lender and they can provide you with the areas in which you can use this loan.
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FHA – Requires 3.5% as a down payment and you can receive up to 6% Seller Assist if the Seller is agreeable. This does involve PMI.
FHA203K – Requires a 3.5% down payment and you can receive up to 6% Seller Assist if the Seller is agreeable. This also requires PMI. This is a renovation loan available to those who purchase a home that needs work or for renovations. There are restrictions on the amount of repairs that can be financed and you must utilize an FHA approved contractor to complete the work. This is a fantastic option for those that want to purchase a home using FHA if the home needs work to be completed.
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VA – Requires 0 Down Payment and you can receive a Seller’s Assist. This does involve PMI and is available to veterans. There is specific paperwork necessary to complete this loan.
Conventional – This can be 10, 15, 20% down payment. If your down payment is less than 20% you will have PMI and you can receive up to a 3% Seller’s Assist if the Seller is agreeable. If you are putting down a 20% down payment you can receive up to a 6% Seller Assist and no PMI is involved.
If you are purchasing a home as an investment property, meaning you already have a home, you will more than likely be required to put a 20% down payment on a property. Remember you will also have closing costs involved in the purchase.
Can I purchase a home with monies received from my parents?
Yes you can however this money must be a gift and there can be no promise of repayment. Also the funds must be documented coming out of your parents account and into your account if it is gifted within a certain period of time prior to the settlement of the home. You definitely want to speak to a direct lender regarding the gift and how to go about being sure it is correctly documented. This will save you much aggravation during the purchase process.
If my house does not appraise for the purchase price can I have an independent appraisal completed and use that for the buyer?
No. The lender for the buyer is going to complete their own appraisal and will not accept another. If you or your Realtor feel that the appraisal is inaccurate your Realtor can appeal it with supporting documentation and a reason why she/he feels it is incorrect. This does not always yield a positive turn out but it is worth the time if the appraisal is definitely out of line.
