Guide to Down Payment

by Brian Berman on December 31, 2011

When applying for a home loan one of the first things to contemplate is your down payment.  You should spend some time discussing the different down payment requirements with one of Mortgage Atlanta’s loan specialist.  Depending on the type of loan you are applying for the requirements will be different.  Some loans allow your entire down payment to be in the form of a gift while others do not.  Take a look at our guide below for some of the common rules and guidelines.  As always please feel free to contact any Mortgage Atlanta loan specialist to go over these guides

FHA LOANS

  • Minimum down payment 3.5%
  • Any or all of the down payment may be given in the form of a gift
    • FHA Gift Rules
      • The gift can cover down payment and closing costs
      • May come from a family member, employer, labor union, close friend, charitable institution, or a governmental agency.
      • A gift letter is required stating the relationship between the parties and that there is no repayment required for the gift. (get this letter from your lender)
      • All funds and transfer of funds must be documented (discuss any transfers or checks with your loan officer before making the transfer of deposit)
      • Currently Seller funded down payments are not allowed.
    • The borrower must show the underwriter proof that they have sufficient funds in their account prior to closing. It is a good idea to have your down payment in your account 60 days before closing. 
    • If you are making any deposits into your accounts 60 days prior to closing always make a copy, front and back of the check and speak with your loan officer before making the deposit.  Some deposits may hinder the loan process.
    • Regardless of down payment percent, FHA loans always require upfront and monthly mortgage insurance premiums; however, the percentage of down payment may lower the mortgage insurance amounts.

CONVENTIONAL LOANS:

  • The minimum down payment on most conventional loans is 5%; however, there are programs with as little as 3% down. 
  • The lender will usually require the borrower to pay a monthly mortgage insurance premium if the down payment is less than 20% of the purchase price
  • The following guides apply for most conventional loans:
    • Gift funds are allowed from valid sources; however, if the gift is less than 20% of the purchase price the borrower will be required to contribute a minimum of 5% of their own funds in the transaction and these funds must sourced and seasoned. (speak with your loan officer at Mortgage Atlanta to discuss this)
    • Any large deposits must be verified and be from a valid source.  Always check with your loan officer before making any deposits over $250 in your account if they are not direct deposits from your employer.  Make copies of the check as well.

SPECIAL LOANS:

  • Georgia Dream Loans
    Ga Dream
    • Mortgage Atlanta is one of the only Mortgage Brokers in GA to be approved to do Georgia Dream Loans.
    • Georgia Dream Loans offer down payment assistance starting at $5000 to first time home buyers in Georgia. 
    • Some Community HEROS like Police, Fire, Nurses and Teachers may get as much as $7,500 in down payment assistance though Georgia Dream
    • There are a number of factors that go into determining if you qualify for a Georgia Dream loan, so call Mortgage Atlanta to find out if you quality!
  • HomePath Loans
    • Mortgage Atlanta and Fannie Mae have partnered up to offer great deals in HomePath homes. 
    • HomePath homes are owned by Fannie Mae
    • Many Fannie Mae-owned properties qualify for HomePath financing which offers great buyer benefits – low down payments, flexible mortgage terms, no mortgage insurance and much more!
    • To find a home home eligible for HomePath click here

Notes about down payment:

Your percentage of down payment may affect how much the seller can contribute towards closing costs.

  • You should always discuss down payment options with your loan officer.  Let them know if you are trying to decide between different loan amounts.  Have your mortgage specialist run the payments at different down payment percentages for you.
  • If you think you may have to change the amount of down payment let the loan officer know right away. It may delay your closing if there is a last minute change that affects your APR.
  • Check with your lender and closing law firm to find out if the law firm requires funds in the form of a wire or will they accept a cashier’s check.
  • If you are going to wire funds try and do it 24 hours in advance.

Please contact Brian Berman founder of Mortgage Atlanta, LLC to answer any of your down payment questions. 678-564-1522 or bberman@mortgage-atlanta.com

Mortgage Atlanta, LLC 1770 The Exchange SE, Suite 280, Atlanta, GA  30339
Georgia Residential Mortgage Licensee 24081; NMLS Company License # 184273


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Mortgage Atlanta, LLC. 601 Woodlawn Dr,, Suite 340. Marietta GA 30067. Phone: 678-564-1522 info@mortgage-atlanta.com

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