As of summer 2018, a 20% down payment on a median-priced home in Portland, Oregon would come to around $85,000. Read on to find out why yours might be much less than that.
You don’t necessarily have to make a 20% down payment when buying a home. But many people choose to do so. That’s because it allows you to avoid the added cost of mortgage insurance.
Generally speaking, whenever the loan-to-value (LTV) ratio rises above 80%, the borrower is required to pay for mortgage insurance. It’s a standard industry requirement that has been around for a long time.
That’s why some home buyers in Portland choose to put down at least 20% when buying a house or condo. They do it to keep the LTV at 80% or below, thereby avoiding the “trigger” that would bring on mortgage insurance.
Not everyone can afford that level of investment. But if you do make a 20% down payment on a home in Portland, Oregon, what might that look like? How much would you actually pay if you went 20% on a median-priced home in the city? Knowing this will give you a starting point for your research and planning.
Down Payment for a Median-Priced Home in Portland
As of July 2018, the median home price in Portland was around $428,000.
Here’s what the down payment might look like for this price range, based on different mortgage programs and investment tiers.
- Using the median home price of $428,000:
- A 20% down payment would be $85,600.
- A 3% down payment (minimum for conventional loans) would be $12,840.
- A 3.5% down payment (minimum for FHA loans) would be $14,980.
That gives you some idea of what the average down payment might be in Portland, Oregon, for different financing options. This is based on the median price mentioned above. Obviously, a higher home value would result in a larger down payment in each of these tiers.
Related: How to reduce PMI premiums
How to Minimize Your Upfront Investment
We’ve talked about the primary reason why some home buyers aim for the 20% threshold. They do it to keep their initial loan-to-value ratio below the level where mortgage insurance is required. But not everyone can come up with a 20% down payment. Fortunately, you might not have to.
There are two ways to minimize the size of your down payment when buying in Portland:
- You could use a home loan program that offers a relatively low down-payment requirement, and pay for mortgage insurance.
- You could also use gift money from an approved third-party donor, such as a family member or close friend.
Both of these strategies could reduce your upfront, out-of-pocket expense.
So don’t let the median or average down payment for Portland, Oregon scare you away from buying a home. These days, there are a lot of options when it comes to mortgage financing. The mortgage industry is more flexible than a lot of borrowers realize. So regardless of your budget, there’s probably a financing strategy that’s well suited for you.
House Values Appear to Be Rising More Slowly
In closing, here’s some good news for home buyers who are planning to enter the real estate market soon. You might not have to worry as much about rapidly rising home values, which was a major concern in previous years.
According to the latest real estate reports and MLS data, home prices in Portland are now rising slower than the national average (as of July 2018). From a future buyer’s perspective, this is a good thing. It gives a bit of breathing room. A slowdown might be beneficial from an economic perspective as well, in light of the double-digit gains of 2016 and 2017.