Bay Area Mortgage Down Payment Guide, 2017

Will you be using a mortgage loan to buy a house in the San Francisco Bay Area in 2017? Do you have questions about your loan options, down payments, and other aspects of home finance? Then keep reading! This guide covers some of the most important topics relating to Bay Area mortgage down payments.

Overview of Bay Area Mortgage Down Payments

Let’s start by looking at the minimum down payment requirements for different types of mortgage loans available to Bay Area home buyers. The minimum amount you have to put down will partly depend on the type of loan you are using.

Conventional — A conventional mortgage loan is one that is not insured by any government agency. This distinguishes it from the other two options below. In the Bay Area, the minimum down payment for a conventional mortgage loan usually ranges between 3% to 5%.

FHA — These loans, which are insured by the Federal Housing Administration, allow borrowers to make a down payment equaling 3.5% of the purchase price or appraised value. Also, as a result of the government backing, the overall qualification standards are a bit more lenient with Bay Area FHA loans (when compared to conventional).

VA — The Department of Veterans Affairs (VA) home loan program has been around since the 1940s. It’s generally reserved for military service members and veterans. The most appealing feature of this Bay Area mortgage loan is the down payment. Eligible borrowers who use this program can finance the entire purchase amount, with no money down. Learn more about these benefits.

Using Gift Money from a Third Party

Bay Area home prices are higher than most other parts of the country. This is especially true in and around San Francisco proper, and in Silicon Valley. So home buyers who use mortgage loans are always looking for ways to reduce their out-of-pocket down payment expense.

One way to accomplish this goal is to use a Bay Area mortgage loan option that allows for a smaller down payment. We talked about some of them earlier. For example, borrowers who use the FHA loan program can put down as little as 3.5% when buying a home in the Bay Area.

Down payment gifts are another way to minimize your upfront investment. This is a little-known but effective strategy for reducing the financial hurdles associated with home buying. Gifting is when a third party, like a close friend or family member, gives you money to put toward your down payment.

Bay Area borrowers, in particular, could benefit from this kind of assistance. Many mortgage programs allow for gifts, and that includes FHA and conventional. Contact us if you have questions about it.

The VA home loan program is another way to reduce, or even eliminate, the down payment costs of a Bay Area home purchase. Military members can generally avoid down payments altogether, simply by using this program. You can’t beat those benefits. Learn more about California military home loans.