What Is The Minimum Down Payment For A House In Bellevue, WA?

If you’ve been dreaming of becoming a homeowner in Bellevue, WA or the surrounding Seattle Metro Area, one big concern may be weighing on you: coming up with the minimum down payment for a mortgage.

The nationwide median home price for active listings was $435,000 in August 2022, according to data from the National Association of Realtors, down from a record high of $450,000. In Bellevue the median price for the roughly 140 active listings as of the end of November 2022 is $2,274,000, but the median sale price is about $1,600,000 which will fetch you a modest 4-bed / 2.5-bath. That’s down significantly from the peak we saw mid-2022 of just over $2,000,000 for a median sale price. There is some relief, however, when you cross the 520 bridge into Seattle where the median active listing price is just $950,000 for the roughly 930 listings currently on the market. In Seattle the median sale price is approximately $950,000 which is down slightly from the peak of mid-2022 of about $1,100,000.

With prices falling, and bidding wars becoming less common, you may be considering buying a home. Depending on the type of mortgage you choose and your willingness to pay for mortgage insurance, you may be able to buy a home with a small upfront down payment.

Let’s take a look at how much you really need in order to stop renting and start building equity in a home.

What is the minimum down payment for a house?

A down payment is the amount of money you contribute towards the purchase of a home. Think of it as the amount you initially put up as your share of ownership. The higher your down payment, the less you’re asking to borrow — and the lower your monthly payments will be.

Lenders require a down payment for most types of home loans, but there are exceptions for certain types of buyers. Here are the basic down payment requirements for various types of mortgages:

• Conventional loans: 3%-15% (depends).

  These loans follow guidelines set by Fannie Mae and Freddie Mac, but lenders can have their own requirements above those standards, as well. There are conventional loan options that require a down payment of as little as 3 percent, but many lenders impose a 5 percent minimum. If the loan is for a vacation home or a multifamily property, you could be required to put down more, generally 10 percent and 15 percent, respectively.

• Jumbo loans: 20% or more (depends).

  These loans are ones which exceed the loan limits set by Fannie Mae and Freddie Mac, and tend to require a higher down payment than other kinds of mortgages. These are larger sums, hence the “jumbo” name. The minimum is usually determined by the individual lender, but it can be 20 percent, 25 percent, 30 percent or more.

• FHA loans: 3.5%.

  These loans are backed by the Federal Housing Administration, and are available for as little as 3.5 percent down if the borrower has a credit score of at least 580. If the borrower has a lower score (500-579), the minimum down payment is 10 percent. FHA loans have other costs, though, including an upfront mortgage insurance premium and mortgage insurance throughout the life of the loan. One option to note: If you have a low credit score today, you can consider taking out an FHA loan and refinancing into a conventional loan when your credit improves down the road.

• VA loans: None Required.

  These loans are available to active-duty military, veterans and eligible surviving spouses don’t require a down payment.

• USDA loans: None Required.

  These loans also don’t require a down payment, but the borrower needs to be buying in a designated rural location to qualify. There are other fees to consider with these government-backed loans, including a VA funding fee and an upfront fee of 1 percent of the loan amount with USDA-backed mortgages.

Average down payment for a house

Now that you have an understanding of the minimum amount for a down payment, you might be thinking about another question: How much is the average down payment for a house? The most recent data from the National Association of Realtors shows that the average first-time homebuyer makes a down payment between six and seven percent. However, to get a closer look at typical down payments, consider what different types of buyers can afford.

First-time homebuyers: 75 percent of first-time homebuyers do not put down 20 percent. In fact, the average first-time homebuyer puts down just 6 percent of the purchase price.

Current homeowners: For those who aren’t new to buying a home, the average down payment is higher: 16 percent of the purchase price.

Cash buyers: Some new homeowners with deep pockets don’t bother putting down a fraction of the purchase price. Instead, they pay for the entire property with an all-cash offer. Some 30 percent of all homes purchased in 2021 were paid for entirely with cash, according to an analysis done by Redfin.

In the Seattle-Bellevue-Tacoma Metro Area we were seeing ridiculously high down payments of 30-50 percent or more, but now that the market has settled down significantly and we’re starting to approach 3+ months of inventory we are seeing people rethink those high down payments in favor of accepting a little private mortgage insurance instead so they can use their remaining cash to perform some cosmetic updating.

IF YOU’RE CONSIDERING BUYING A HOME IN THE BELLEVUE, WA AREA PLEASE CALL/TEXT US AT 206-202-6008 OR FILL OUT THE ONLINE FORM TO GET IN TOUCH!