Common questions about down payment, answered by Mike Swaleh.
Do I need 20 percent down?
No – that is probably the most persistent myth in this business. Several programs allow far less, and VA and USDA allow zero down for eligible borrowers. Twenty percent avoids mortgage insurance on a conventional loan, which is a benefit, not a requirement. Mike can tell you the minimum for the programs you actually fit.
Are there down payment assistance programs?
Yes – assistance exists at state, county and city level, including in California, usually with income limits and first-time-buyer definitions attached. Availability and funding change constantly, so rather than name a program that may have closed, it is worth having Mike check what is live right now for your area and situation.
Can my down payment be a gift?
Yes, gift funds are widely allowed, usually from family, with a gift letter and a documented paper trail showing where the money came from. Rules on who can gift and how much differ by program. Do not move money around before talking to Mike – undocumented transfers create problems.
Where can my down payment come from?
Savings, investments, retirement funds, gifts, proceeds from a sale, and in some cases assistance programs. The requirement is that funds are sourced and seasoned – the lender needs to see where the money came from and that it has been sitting in your account. Large unexplained deposits create conditions, so keep the trail clean.
Can I use my 401k or IRA?
It is often possible, either as a withdrawal or a loan against the balance, and how it affects your file depends on which you use. There are tax consequences to consider, and those are a question for your tax professional rather than for me. Mike can explain the lending side.
Mike Swaleh, Area Manager · NMLS #739145 · Fairway Independent Mortgage Corporation, NMLS Entity ID #2289
436 Lincoln Boulevard, Suite 105, Lincoln, CA 95648 · mswaleh@fairwaymc.com · Licensed in AZ, CA, CO, FL, GA, IL, KY, MO, NV, NC, OR, SC, TN, TX, WA
This information is not intended to be an indication of loan qualification, loan approval or a commitment to lend. Other limitations may apply. This is not an offer to enter into an agreement. Not all customers will qualify. Information, rates, and programs are subject to change without prior notice. All products are subject to credit and property approval. Not all products are available in all states or for all dollar amounts. Fairway is not affiliated with any government agencies. Licensed by the Department of Financial Protection and Innovation under the California Residential Mortgage Lending Act, License No 41DBO-78367.
Equal Housing Opportunity. Verify licensing at nmlsconsumeraccess.org
