I was always under the impression I had to put 20 percent down to buy a home and a lot of buyers, maybe first-time its first-time buyers think that that's the case and it's just not.

And so what I want to do is actually show you just real quick the different options you have when you're looking to purchase a home and potential down payment options so that we can get into the first home or even the next home without having to come in with this 20 percent down that everybody thinks is absolutely necessary. It's just not the case.

So here we go, quickly I apologize if the light showing on the screen here. Real quick, but I want to kind of show you down payment options. Obviously, if you're VA, if you're military, it's zero percent VA. You can do it. It's amazing. So I would highly take advantage of that. Most of the VA people know about that. Three and a half percent is FHA. That's an FHA loan through the government. Right. So that is a great one to do.

There's other fees and things on top of that. But consider that three and a half percent down payment on a home you may want to consider. That's a great option. And if you go five percent, a little bit more, you can get into conventional type loans, as they call them, conventional loan, not government-backed conventional loan, as little as five percent down on single-family homes and even potentially some condos. Right. And when you start getting into 10 and 20 percent down, that's where likely financing condos, not just single-family, likely takes place in the 10 and 20 percent down category.

But I want to also give you an example of what it would look like in terms of a payment difference on an average priced home in San Diego County at 10 and 20 percent down payment. OK, here we go.

Let's presume seven hundred fifty thousand dollars home for a moment, 10 and 20 percent down payment. So you're looking at seventy-five thousand or one hundred and fifty thousand down payment. Now, a lot of people say, oh, gosh, I don't have one hundred fifty thousand, but I want to buy a home. I can put down seventy-five. I can do it that way. Great. Get into the first home and buy that seven hundred fifty thousand dollar house.

Let's look at the payment because this is when people say, oh gosh, I to put 10 percent down, my payments are going to be higher. You're right, it will be. But let's look at the difference right. In that payment versus the down payment, because of the difference here. Seventy-five thousand dollars, whereas the payment difference, if you look at the principal interest, taxes and insurance, PITI on a seven hundred fifty thousand dollar home.

Let's presume right now in San Diego, it's a three percent interest rate that we're seeing in the marketplaces right now. OK, the PITI on the 10 percent down is going to be about four thousand one hundred sixty-eight dollars a month. That's principal interest taxes and insurance. San Diego County.

OK, now, 20 percent down your payments lower about thirty-five hundred for the principal interest taxes and insurance. The delta between these two is about six hundred and sixty-eight dollars. Six hundred and sixty-eight dollars. Now, what I think is important to understand is, OK, that's six hundred sixty-eight dollars. Yeah, that's a lot of money. But otherwise, that would have to come in with seventy-five thousand right. Down payment. So what is that difference divided by?

If I take seventy-five thousand dollars delta here and divide it by the six hundred and sixty-eight dollars per month Delta here, what does that look like?

Right. How many months am I going to have to go through to make up that difference? It's one hundred and twelve months, it's a hundred and twelve months that you're going to have to go through before that difference is made up. So think about that for a moment, right? Because what you can do, OK, is you can get into the home as markets change and things appreciate and things like that, you get to the point where you have 20 percent equity in the home at that point and you can refinance the home and take out this mortgage insurance difference in the payment, very, very, very important.

So you can understand the better the benefits of that. If you only have this and you're trying to get into that home, you can do that and then in some time refinance it and get that payment down. Because of the equity up, the equity is up and you have the 20 percent. So they pull off the mortgage insurance and then now your payments dropped. But yet you're getting the advantages of getting into the home with only 10 percent down.

It makes sense. So I think what's important here is your options on the down payment, zero percent for VA, three and a half percent, FHA, five percent conventional, 10 percent conventional, and 20 percent conventional, as we all know. So hope that makes sense. Any other questions? Get in touch with us. Let me be a resource for you if you're looking to buy, sell or invest here in San Diego. Until next time. Have a great day.