Do You Have Your Own Cash Saved For A Down Payment?

January 21st, 2013

There is a requirement on Conventional loans to have a certain amount of your down payment come from your own hard earned savings. Not only do you need a certain minimum down payment for different types of Conventional loans, but you also need to make sure a certain amount comes from your own money, and not a gift, or borrowed funds, unless they are secured against an asset, like real estate or a stock account.

On a Conforming loan, which are loans that go up to $417,000, the minimum down payment is 5% down. All of that 5% down payment has to come from your own funds. Any other funds needed, which after the 5% minimum down payment requirements are only the closing costs, can come from a gift. You may also borrow the closing costs, as long as you are borrowing against an asset you own, like real estate, a CD account, or a stock account. Those assets are your own, and borrowing against them is considered using your own funds. Borrowing money from an unsecured source, like a personal line of credit or a credit card, is never allowed.

On a Conforming “High Balance” loan, which are loans that go from $417,001 to $625,500, the minimum down payment is 10% down. All of that 10% down payment has to come from your own funds. Any other down payment you choose to make above the 10% down minimum can be from one of the aforementioned acceptable sources, but you have to have 10% of the sales price of your own cash into the deal.

On a Jumbo loan, which are loans over $625,500, the rules vary from lender to lender as to the minimum amount of down payment needed, but it is usually 20% down. In general I would say if you have 5% of your own assets into the down payment, the rest can be from a gift or other acceptable source. Also, you typically need a much larger amount of “cash reserves” on a Jumbo loan, such as 6 months of the monthly payment, or 12 months, or 10% of the sales price. The rules vary here as well.

Make sure you ask your lender what the rules are if you are getting a gift, or are using any other source other than your own money, to ensure there will be no last minute snags.


Brian Martucci is a loan officer for Capital Bank Home Loans, a division of Capital Bank, N.A. He has been in the mortgage industry since 1986 and has served in a number of roles, including loan processor, loan officer, mortgage broker, branch manager, and vice president. Brian Martucci – NMLS# 185421. His opinions do not necessarily reflect the opinions and beliefs of Capital Bank Home Loans or Capital Bank. Capital Bank, N.A.- NMLS# 401599. Click here for the Capital Bank, N.A. “Privacy Policy”.

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