What is your ideal down payment?

Being in real estate, and helping buyers with their purchases I have been able to see a lot of peoples financial situations over the years.   We know that housing is very important, but in the recent past I have started to see a shift in the type of houses people have wanted to buy.  For example, no too long ago it seemed as though having the nicest house, in the best neighborhood, with the most square footage was the most important.  Now, it seems as if there is a shift.  Instead of going after the most square footage, it seems that families are looking fo the highest quality home they can get with the minimum space needs for their family.  Where putting the least amount of money down was important in the past (3.5% FHA), we are now seeing that people are willing to put more down on their primary residence so they can bring their home payment down.

In a recent study by American Financing, if given the choice between putting 10% – 30% down, the most popular down payment is 10%.   Looking at borrowers under the age of 35, it still seems the most common down payment would be less than 8% on average.  This tells us that people are looking to put down the minimum possible to get into their house, but they may also be willing to a little more down than in the recent past.

The American Financing survey also showed that renting is still less desirable than home ownership, and if people had their rent raised, by as little as $100/month, it would be a trigger to have them start looking at buying.  Also, the survey showed that married couples are more likely to start looking to buy within 2 years, versus single people who would be more likely to wait almost 5 years before purchasing.

What are your thoughts about down payment?  Do you understand how interest rates effect your payments?  Do you understand how Private Mortgage Insurance can effect your payments?

Feel free to ask your questions!

Until next time,

Sanjeev (Sunny) Advani
– Realtor/Property Manager/ Investor