Purchasing a Home over $500,000? 5% Down Doesn't Cut it Anymore
Starting February 15, 2016, homes purchased for greater than $500,000 will require a little more down payment than the current 5% requirement. Under the new rules, 10% down is required on the purchase amount in excess of $500,000, while you would still only be required to have 5% down on the first $500,000.
For example, under the current rules, if you were purchasing a home for $650,000, you would have to put a minimum of 5% down ($32,500).
Under the new rules, on the same house you would have to put a minimum of 5% down on the first $500,000 ($25,000) plus 10% down on the remaining $150,000, ($15,000) for a total down payment of $40,000.
The thought process behind this change in policy is to ensure that those purchasing homes over $500,000 have ample equity in their homes to protect themselves in a market where house prices are somewhat elevated.
Posted by Alana Myers
on January 6, 2016