question about buying a house...

[Semidevil]

So lets say I want to save up and buy a house. One of the things I need to consider is the down payment. exactly how much is the down payment? how is it calculated? is it by percent? is there a minimum downpayment?

 

[iamwiz82]

It's whatever you want. 20% is the traditional amount, as anything less than this will cause you to have to purchase PMI (private mortgage insurance) to help protect the lender in case you default, though there are many ways around it.

 

[vi edit]

Depends on your credit rating, the lender, and the particular loan program you are using.

You can actually finance over 100% of the home cost if your credit is high enough and you really wanted to.

Otherwise though...if you do a "conventional" loan and have less than 20% down (20% of the home value + closing costs) you'll be looking at paying out PMI, which is money down the drain. You can avoid that by splitting the loans and getting an 80/20 or 80/15 w/ a 5% down payment.

 

[Semidevil]

what is 80/20 and 80/15?

 

[vi edit]

Percents of loan value.

If your house cost 100,000 an 80/20 loan would be a primary loan for $80,000 with a second smaller loan in the amount of $20,000.

You split up the principal to avoid paying PMI, albeit at the cost of a higher interest rate.