Minimum Down Payments for Different Loan Programs

As of this writing, here are the minimum Down Payment requirements for mortgage lending here in the NY Metro Area for the basic loan programs.

As of this writing, here are the minimum Down Payment requirements for mortgage lending here in the
NY Metro Area for the basic loan programs.
Veterans Administration Loans:  If you are a Veteran of the Armed Forces and you qualify for VA Guaranteed mortgage financing, then eligible Veterans are permitted to financing up to 100% of the purchase price of the home. That means no down payment.


FHA 3.5% Down Payment:  For other HomeBuyers, Non-Veterans, the program in the NY Metro region for qualified Homebuyers with the lowest down payment requirement currently is the FHA or Federal Housing Administration. The FHA Insures mortgages made by banks and Mortgage Bankers and allows for a down payment of only 3.5%.
The FHA is used most often by First Time HomeBuyers, but you don’t have to be a First Timer to use the FHA program.
The FHA will provide insurance for mortgage loans on 1-4 Family Homes, and FHA Approved Condominiums.  FHA Insured financing is not available for Co-Op apartment purchases in New York.
Conventional (FannieMae/FreddieMac):
After FHA, Conventional financing through either FannieMae or FreddieMac allows for a minimum down payment of 5%. The Lender will need to obtain approval from a Private Mortgage Insurance company (PMI) to complete the loan approval.
For Co-Op Apartment purchases, minimum down payment under Conventional guidelines is 10% down payment with PMI.  The actual Cooperative may have different down payment requirements regardless of the financing you can obtain; best to check with your Realtor for the qualifying basics of any specific Cooperative.

I welcome Comments for all my blog entries. I will be happy to review and approve all legitimate comments provided by readers of I do not permit unfettered access to comments for obvious reasons: mortgage spammers and their ilk. If you wish to Comment on any entry, please do so and I will quickly review and approve.

Thanks for reading

Hope that helps!

                                                Trevor Curran NMLS #40140

When is the best time of year to buy a home?

If you know that buying a home is the right thing to do for your own personal reasons, then YOU make the time. YOU determine the “when.”

Is there a “best” time of year to buy a home?

Is there a time of year when Sellers are more willing to negotiate because they are more desperate?

When is that time? When?

If you trust your fundamentals, if you know that buying a home is the right thing to do for your own personal reasons, then YOU make the time. YOU determine the “when.”

Maybe it’s because I teach my clients how to negotiate like piranhas.

Maybe it’s because I’ve been looking at (and dreaming of) real estate since I was in my twenties living in an apartment in Astoria.

Maybe it’s because of my eighteen years in the mortgage business working all year ’round through all kinds of markets.

Whatever my reasons, I will say to you this: YOU make the time because YOU get out there and find, force and MAKE the deal that you’re happy with.

The “when” is not based on the market; rather YOU determine the when by shopping and finding and making your deal.

I believe in negotiating hard and tough and forcing a price. I believe in getting up and walking away from the table.

I believe the “dream house” exists in our minds, therefore you can never truly “fall in love” with a house.

I believe you, as a Buyer, truly control your own destiny and I believed that even when the market was overheated and Sellers were insane. (In my long experience, Sellers are ALWAYS insane! You just have to search until you find one who’s willing to be a bit more reasonable than the rest!)

Maybe it’s because I believe it’s all up to YOU.

Rent? Or Buy? The New York Times weighs in (with fancy graphics!)

My opinion remains: If you want a ‘piece of the rock,’ something to call your own, something that will improve your quality of life and enhance your financial one, then homeownership IS a wonderful undertaking at any time during any kind of market. Real Estate section features an article today providing statistical proof that it’s better to rent than own. I’d suggest you read the article, but you must then read the comments thread linked to in the sidebar.

There you will find a refreshing clarity expressed by consumer-comrades-in-arms. (Me, I’m just an industry insider with a “vested interest” in promoting homeownership!)

Here’s what I wrote as my contribution to the comments thread:

“I’ve participated in this conversation over and over again on the Craigslist Housing Forum. The posts above are typical of the distinct split in opinions.

I think Mr. Leonhardt’s article captures the essence of those differences, but skews too much to the recent ‘craze’ for real estate and the negative side effects of that way of thinking.

I’m one of those mortgage professionals with a ‘vested interest.’ I’ve been helping people buy homes since 1989, so I’ve seen all kinds of markets, interest rates, and heard thousands of different opinions from people as to why they buy homes. That having been said, I think it’s always a good time to buy a home. Always.

I work in the NY Metro region, and many of my clients come from the same background as I do: hardworking New Yorkers tired of paying rent, fighting for parking spots, listening to noisy neighbors, or arguing with irresponsible landlords to repair leaky faucets.

My take on homebuying is based on the intangible benefits of homeownership: the long term investment in yourself and your family, and the financial benefits (beyond tax deductions) derived from the homeownership experience.

I grew up in an apartment building in Queens. As a young man I rented. I hated it. I was determined to someday own a home. I taught myself about real estate back when there was no internet, no first time buyer programs, and the MLS was a telephone-book sized list without photographs.

I remember being laughed out of a real estate office by the broker. Then, I found my way into the mortgage business quite by accident during the recession of the late 80’s. Five years later, I bought my first home in that same neighborhood and had the last laugh.

I would never say Landlords are evil, or assume that fellow tenants are self-centered, noisy, dirty, and insensitive to their neighbors’ quality of life, but I’ve lived in rental apartments. There’re numbers on a page—as indicated in the article—comparing costs/benefits of renting vs. buying, and there is reality.

If you determine that your quality of life will improve—and I think by extension, so will your financial life, in the long run—when you own a home, then it’s the right thing to do.

If you happen to have great neighbors and responsible landlords, if the cost benefits are more favorable, and you can discipline yourself to actually invest that money you’re saving by renting, then that’s the right thing to do, too.

For my part, I’ve never advocated the ridiculous notion that buying a home is an investment in the short term sense indicated in the article, and promoted by the NAR economists. (For the cynical reader, a quick google of my name will provide you with evidence of what I say, and what I don’t say)

If some Realtors want to market their business that way, so be it. Car companies advertise cars driving slalom-style at high speed on scenic country backroads. That doesn’t mean the average person drives that way.

I refuse to participate in such nonsense and I’ve walked away from client referrals who come to me chittering about how they want to make an investment in buying properties.

I’ve always looked to owning a home as something you do for the long term: at least 7-10 years (which used to be the average for American families until this ridiculous ‘boom’ market came along). That’s why I’ve always advised my clients to get 30yr fixed rate mortgages, not 15’s, not ARM’s, and certainly not those other insane mortgage products that are now wreaking such havoc among American homeowners.

If you want a ‘piece of the rock,’ something to call your own, something that will improve your quality of life and enhance your financial one, then homeownership IS a wonderful undertaking at any time during any kind of market.

Closing Costs in NY: Arrrgghh!!!

Closing costs, expensive as they are, are a “fact of life” when financing a home in New York.

Yes, it’s a teeth-grinding, heartburn-inducing, stomach-churning experience buying a house in NY with closing costs being so high.

I am not going to go into the long winded and detailed explanation of the breakdown of closing costs. That’s for another time. I really want to express for you the reality of what the closing costs are: HIGH.

(NOTE: I am referring here to the purchase of houses and condominiums, NOT Co-OPs)

First, the average closing costs total out to about 4.5%-6% of the mortgage amount. On a $400,000 loan, that’s $18,000 to $24,000. WHOA! That’s an awful lot of money. I came to realize a long time ago how difficult it must be for the average New Yorker to save up the money for a downpayment on a house, only to later learn they would need all this extra money for the closing costs. That’s why I have always helped my clients obtain financing high enough to allow the minimum down payment (or recently NO downpayment). In this way, the money they’ve saved up is used for the closing costs.

In New Jersey and Connecticut, closing costs are half of the norm here in New York.

I don’t know why that is, or why the costs are so danged high here in NY. I just know that’s the way it is. If you are getting ready to get out there and shop for a house: get used to this idea. It’s painful, I know, but it is what it is.

Next, let’s talk about disclosure. Federal regulations require disclosure of closing costs to the borrower. We Lenders have to send you an estimate of your closing costs as soon as you make your loan application. The problem is these estimates, being estimates, are subject to the discretion of the party preparing them.

Without complicating the issue, let’s just say that it is entirely possible you could receive an estimate of closing costs that is woefully short. Even if the costs disclosed to you are substantially short of what you actually pay, it’s perfectly fine.

At my office, the company prepares the most accurate estimate possible.

For my part, I have ALWAYS given my clients the ugly numbers right from the get-go. I hate surprises and I want my clients to know well in advance how much money they’ll need. My estimates include things that aren’t even listed on the standard Good Faith Estimate: Purchaser’s attorney; adjustments to the Seller for taxes, water, fuel; the “tip” to the title closer, even!

My estimates are usually within less than $1000 of the final cost to my clients.

Finally, beware of “NO CLOSING COST” advertising come-ons. Unless the loan is a Home Equity second mortgage, the borrower has to pay closing costs. This cute advertising gimmick could be perfectly truthful and mean any number of things. Without breaking them down, understand that you will pay closing costs one way or another.

Closing costs, expensive as they are, are a “fact of life” when financing a home in New York.

Co-Op Loans: Yes and No

Co-Op loans can be difficult to deal with and many good, experienced mortgage pro’s don’t want to touch them.

I just had the most interesting conversation with an account executive at a national wholesale Cooperative loan bank. I’m working on creating a relationship with them so that my company can sell loans directly to them. This is how mortgage banking works: we process and underwrite the loan, close it in our name, then sell the loan into the secondary market.

In this case, I’m looking to expand the options available to my clients for Co-Op loans. The company I spoke with today offers Co-Op loans with 5% downpayment, which is unheard of in the business.

In any event, the young woman doesn’t know me from Adam. When I finished introducing myself and the explaining the purpose of my call, she responded rather oddly.

“You know that we are NOT a Sub-Prime Lender? We don’t do those types of loans, so…” I cut her off and said, “Yes, I know that, that’s not the reason why I called you.” I repeated the purpose of my call. She still seemed a little guarded, but eventually explained the automatic reply. “I get calls all day from mortgage brokers who want to send me loans with low credit scores. I’m tired of explaining to them we don’t do those loans.”

We chatted some more, about my experience in the business and the kinds of customers I work with for Co-Ops and she warmed up. She then regaled me with horror stories of mortgage “professionals” who don’t know a Co-Op questionnaire—“…a what?”—from a snowtire. It was a great chat and reinforces what I tell my wife quite frequently: “Any idiot can get into the mortgage business.” So many mortgage “professionals” out there are driving people crazy: both the customers like you and the Lenders they try to do business with. Bottom line: these folks just don’t know what they are doing!

I’m happy to report that as I’m writing this I have just received the email with the registration information so that I can sell loans to her company.

As a rule for Co-Op’s this is what you should know:

1. Maximum LTV (Loan To Value) is 95%. That means you need 5% down. There is no 100% financing available.
2. There will be PMI (Private Mortgage Insurance) on the loan. You can’t break Co-Op loans into 80/15’s to avoid the PMI.
3. You must verify—I usually do it for my clients—with the Co-Op if they will accept financing with only 5% down. Many Co-Ops require at least 20% downpayment, regardless of what a Lender is willing to give.
4. When I work with you to qualify for a Co-Op I do the following:
-Qualify YOU: Income, Assets, Credit
-Qualify the Cooperative: I contact the management company directly and have them complete a standard questionnaire.
-Advise you on making an offer (when necessary I check with my staff appraiser to comp a property for my clients) both on price and how to negotiate
-All that other “mortgage stuff” necessary to approve and close your loan once you have a real deal in contract

Co-Op loans can be difficult to deal with and many good, experienced mortgage pro’s don’t want to touch them. Too much work involved and too great a chance the loan doesn’t close. The loan might not close through no fault of the Lender, the Co-Op board might reject the buyer, or worse (and more commonly) the Cooperative corporation may not be qualified.

More reasons to own rather than rent

People get lost in discussions about interest rates, market values, and locations. I try to steer clear of those topics; if I do participate, then I always express the reasons I believe owning your own home are important. Owning a “piece of the rock,” changes you both personally and financially for the better. As Martha Stewart would say, “It’s a good thing.”

One of the reasons I think it’s better to own than rent is the problem with landlords.

Today on both Craigslist Housing Forum and in the real estate section there are stories of people having problems with their landlords.

In Craigslist, the person is worried about being evicted from his apartment. Why? Because he turned on the heat when his landlord refused to! More here:

CL Housing Forum Eviction thread

A young couple renting an apartment in Fort Greene finally had enough of bad conditions; they purchased a Co-Op apartment. Here’s a quote from the article, and a link to the same:

“Two years ago, they moved together to a one-bedroom rental in Fort Greene, Brooklyn. It was in bad shape, with flaking paint and crooked windows. The basement storage room was dank and moldy. With one shared closet, ‘I had so many more clothes that Harry felt he was having short shrift,’ Ms. Marquez said. Considering the apartment’s condition, it seemed expensive, at $1,580 a month.

Ms. Marquez, health editor at Woman’s Day magazine, was sick of ‘dumpy apartments with landlords who were not leaping to fix things,’ she said. ‘I wanted my own place where I could do whatever I wanted, and if something went wrong I could rely on myself to get it done.'”