During the recent housing bubble, borrowers were often taking out mortgages with far less than a 20% down-payment. Down-payments have been as low as 6%, or even less. The National Association of Realtors’ latest Confidence Index Survey shows that fewer first-time buyers had mortgages with 6% or less down compared to 2009.
With private mortgage insurance making a comeback in 2011, there are also several major factors that are making it difficult to obtain a mortgage with such a low down-payment. First, there is a very low number of properties available in the South Bay, causing competition for those homes to soar. Only really good offers with solid down-payments can stand their ground in such stiff competition. Stricter underwriting standards implemented in late 2013 make it far more difficult to qualify for a mortgage with a low down-payment. The higher cost of government mortgage insurance, and a reduction in the loan limits at the FHA, have also contributed to the 6% down payment disappearing.
With demand for homes and mortgages so high across the board, only those with a dedicated mortgage banker and a solid credit score are finding it easy to navigate the 2014 mortgage industry.
