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As kids, there are some things we all learn while we’re growing up:
• Never drink soda after you eat Pop Rocks.
• Cracking your knuckles will give you arthritis.
• You’ll catch a cold if you go outside without a jacket.
• It takes a 20% down payment in order to buy your first home.

boy with piggy bankAfter having both a good laugh and some time to gain a little experience, we come to find out that things are not always as we believed when we were much younger. However, in the case of purchasing a home, it can actually be a little harder to shake the conventional wisdom. While the first three childhood whimsies fall away easily, it may take much longer for many of us to realize that strong options do exist for getting into a home without a full twenty percent down payment. Let’s take a look across the purchase price spectrum and take stock of some of the options we offer here at RPM.

0% Down Payment: Are you a veteran or active member of the military? If so, we thank you for your service! Inquire about VA loan options that may require no down payment at all, with loan amounts up to $1,000,000. (Maximum purchase price: $1,000,000)

3% Down Payment: Once available for conforming loans ($417,000 or less), the 3% down payment fell victim to recent regulatory legislation and restriction. However, there is an industry push to restore this option so check back with us frequently for status.

3.5% Down Payment: This is the minimum down payment requirement for an FHA loan. The maximum loan amount will vary based on the location of the property you wish to buy. Ask us if an FHA loan would be the best fit for your profile and geography. (Maximum purchase price in most high-cost areas: $648,000)

5% Down Payment: Conforming loans with private mortgage insurance (PMI) will still widely permit a 5% down payment. (Maximum purchase price: $439,000)

10% Down Payment: RPM has several options which accommodate a 10% down payment. Depending on price point, borrower credit profile and other facets of the scenario, we can use PMI, “piggyback” or “80-10-10” loans, and also the REX Homebuyer program. We see a lot of 10% down payment scenarios at RPM, so it’s no surprise that our suite of options is an industry standout. (Maximum purchase price: $1,562,500)

12.5% Down Payment: The REX Homebuyer program can match a buyer’s down payment funds up to a total down payment of 25%, so this requires a 12.5% investment from the buyer. (Maximum purchase price: $2,000,000)

15% Down Payment: We are pleased to introduce a single loan solution, to 85% of the purchase price, with no PMI. (Maximum purchase price: $2,352,500)

Now that we’ve established an overview, a best next step is finding the perfect fit for your price point and buyer profile. Realize that some of the above options function in a refinance setting as well, and this may be vital to some who have recently seen their property values restored. Where no good alternatives existed just a short time ago, now perhaps the extended reach of our mortgage programs would permit a homeowner to get into the better terms that were elusive for several years and while there may have been insufficient equity to refinance.

Purchase or refinance, if you’ve been just shy of the 20% mark, leave your assumptions at the front door and find a loan advisor near you. Oh, and remember…be sure to eat your vegetables.

By Rob Spinosa