Putting 10% downpayment instead of 20

[Fffggg123]

We saved the 20 percent for our budget for a few years but now have a business opportunity, so we dont want to pay it all to the house. Would this make our offer less sexy? Our monthly income is high, so there is no question of not being able to pay, why would the sellers care if they are still getting their asking price from the bank? What do you think?

Our realtor adviced against it.

[Anonymous]

You’re not bound by the offer in terms of financing arrangements — you can say whatever, I think standard contracts have some caveat that the buyer can seek financing on whatever terms.

[Anonymous]

As a seller, I didn’t care about this. None of my business how much you put down with the bank- it’s all cash to me

[Anonymous]

We did 10% and the seller didn’t care. The only reason they’d flag it was if your financials indicated you might not be approved for a loan. But sounds like that wouldn’t apply in your case.

Sellers care about offer price and, to a lesser extent, closing schedule. They only care about the loan insofar as it impacts closing. All cash offers are attractive because closing is more straightforward. But most people finance and the details of the financing aren’t important on their end.

[Anonymous]

If you’re not putting 20% down sellers may think you can’t come up with the cash to handle a missed appraisal. That’s especially a concern if you’re bidding $100k+ over asking or if your lender is one of the major banks, which may have more conservative appraisers.

You can mitigate some of that by having your lender reach out to the sellers agent proactively and verify that you have the cash for a 20% down payment and that you can handle any issues with the appraisal (that is why using a reputable local lender is always a good idea).

[Anonymous]

Anonymous wrote:If you’re not putting 20% down sellers may think you can’t come up with the cash to handle a missed appraisal. That’s especially a concern if you’re bidding $100k+ over asking or if your lender is one of the major banks, which may have more conservative appraisers.

You can mitigate some of that by having your lender reach out to the sellers agent proactively and verify that you have the cash for a 20% down payment and that you can handle any issues with the appraisal (that is why using a reputable local lender is always a good idea).

If they are putting down 10%, they will have some cash leftover to bridge any missed appraisal. Read what the OP wrote - "We saved the 20 percent..."

As a potential seller, I would not care one iota so long as they were the best when it came to offer price + minimal contingencies.

[Anonymous]

Anonymous wrote:

Anonymous wrote:If you’re not putting 20% down sellers may think you can’t come up with the cash to handle a missed appraisal. That’s especially a concern if you’re bidding $100k+ over asking or if your lender is one of the major banks, which may have more conservative appraisers.

You can mitigate some of that by having your lender reach out to the sellers agent proactively and verify that you have the cash for a 20% down payment and that you can handle any issues with the appraisal (that is why using a reputable local lender is always a good idea).

If they are putting down 10%, they will have some cash leftover to bridge any missed appraisal. Read what the OP wrote - "We saved the 20 percent..."

As a potential seller, I would not care one iota so long as they were the best when it came to offer price + minimal contingencies.

Read what I wrote about having the lender verify they have the cash for 20% down. As a recent seller I can say that's an important step that a lot of buyers don't do. If I get an offer with 10% down and no reach out from the lender I'm just going to assume they don't have the cash to cover a lower appraisal.

[Anonymous]

Submit your offer with a preapproval that says you will be putting down 20%. If your offer is accepted and your purchase contract is ratified, you can work with your lender to reduce your down payment to 10%. Nobody will care at that point.

[Anonymous]

As a seller I didn’t care about the DP.

[Anonymous]

We sold to buyers who put down 10%. However, their financial disclosure showed they had sufficient funds for 20% plus additional. I might have been concerned if they were putting down 10% and had nothing left over.

[Anonymous]

A bigger question is whether it makes sense to put down only 10%. With mortgage rates around 4.5% and stock valuations high, it seems an after-tax, risk free return of 4.5% on your money is pretty good.

[Anonymous]

Anonymous wrote:A bigger question is whether it makes sense to put down only 10%. With mortgage rates around 4.5% and stock valuations high, it seems an after-tax, risk free return of 4.5% on your money is pretty good.

We went under contract a few weeks ago and are planning to put about 10% down (and, very importantly, don't have to pay PMI) -- but our rate is 2.75% on a 30 year jumbo.

[Anonymous]

As a seller I didn't care. Of much more interest to me than down payment was whether buyers had sufficient cash (or access to liquidity) to cover an appraisal shortfall because they all waived all contingencies.