A Down-payment For A Mortgage, Whats Safe?

It was only a few years ago that many first time home buyers scoured the market for

great mortgage deals and were ultimately approved for expensive homes with little or no money down, for homes they could barely afford. Once these loans began to default one after the other, the entire financial and real estate markets collapsed. What was a great down payment two years ago would be laughed at today. So, in today's market, whats a safe down-payment for a mortgage?

Nothing less than twenty percent. Lenders do not want to accept any more risk. They don't care who you are or how great your credit is. Long gone are the days when you could even borrow your down payment in the form of a second mortgage. And, in many cases, borrowers who do have the required 20% to put down are still being turned away in droves.

What lenders want is pure unadulterated sweat equity. You need to prove you not only have at least a 20% down payment, you need to prove it's your money. They want to make sure that if anything happens where you default on the loan, that you have as much of a financial stake in the property as they do. At least, you'll be hurt as much as they. You will both be losing significant amounts of money. Without a down payment, people have been walking away from homes and losing nothing.

Today, this scenario isn't going to happen. People who can afford these palatial homes with significant down payments and plenty of sweat equity still are being told they don't qualify for loans for a host of reasons that would never have been a problem a mere 24 months ago.

What would have been the dream customer two years ago is now turned away by almost every kind of lender. People are being denied mortgages who have superb credit and six figure steady incomes. Many times the lenders won't even tell people why they aren't being approved.

If you're one of those lucky couples who received tens of thousands of dollars as shower and wedding gifts, forget about using this as a down payment. Banks don't care. They know you didn't earn it, and if you default on your mortgage you won't feel the financial pinch of losing your down payment.

Perfect credit, high income, and large down payments won't even guarantee you a mortgage.

by: Sarah Park

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