Down payments parallel current FHA, Fannie Mae and Freddie Mac guidelines for FHA, conforming, non-conforming, jumbo and super jumbo mortgages. So, your down payment will be exactly what it would be if you were qualified for conventional mortgage financing. A breakdown is provided below to give you an idea. It’s important to note that because our contracts are in compliance with the IRS Installment Sales Contract Guidelines and are classified as a bona fide sale where you become the legal homeowner immediately, you can access fully vested funds in a 401k without penalty or taxes using a loan that you repay to yourself while your investments stay in your 401k.
If you are short on down payment funds and need to move, contact us immediately because we have a variety of creative options and payment plans that may work for you.
The reason the down payments pattern current lending guidelines for mortgage lenders is because at some point during the contract term you will need to refinance and when you do, your mortgage lender will have to follow the Loan To Value (LTV) guidelines for the mortgage you’re applying for and this will generally require an equity position in an amount equal to the standard down payment guidelines.
FHA 3.5% Down
Fannie Mae/Freddie Mac 5% Down
Jumbo 10% Down
Super Jumbo 20%+ Down
FHA Loan Limits vary by what’s called an MSA or Metropolitan Statistical Area so it’s necessary to determine the loan limit for the market you want to purchase a home in but generally speaking, the loan limit is $347,000 in most MSAs nationwide for a single family dwelling. High cost areas like some areas in California, Nevada, New York, Florida, etc., have much higher FHA loan limits and can exceed $800k. To see what the FHA loan limit is for your MSA, click through to HUD’s website and enter the county and state you want to purchase a home in.
Fannie Mae Loan Limits are as follows: $417,000 for the contiguous United States and $625,500 for Alaska, Guam, Hawaii, and the U.S. Virgin Islands
Freddie Mac Loan Limits are the same as Fannie Mae
Jumbo Loans are loans above $417,000 and below $650,000 in most states.
Super Jumbo Loans are loans above $650,000 in most states.
There are some “high cost” states that have variances on these loan amounts but this will provide a general rule of thumb.