As a home buyer in Oregon, you have options when it comes to the size of your down payment. The minimum required investment can vary from one mortgage program to another. Today, we will look at the minimum down payment required for a conventional home loan in Oregon, updated for 2018.
Minimum Down Payment for a Conventional Loan
Definition: A conventional home loan is one that is not guaranteed or insured by the federal government. This sets them apart from the government-insured mortgage programs, such as FHA and VA.
In Oregon, conventional loans are the most popular financing option used by home buyers. Specifically, the 30-year fixed-rate conventional mortgage is the most widely used type of loan today.
So, how much do you have to put down when using a conventional loan in Oregon? The minimum investment can vary based on a number of factors, but it can be as low as 3%.
Freddie Mac and Fannie Mae (the government-sponsored corporations that buy home loans from lenders) can purchase products with loan-to-value ratios as high as 97%. This means that the minimum down payment for a conventional loan in Oregon can be as low as 3% of the purchase price.
How This Might Translate into Real Dollars
Down payment sizes vary based on home values and other factors. Here is what a down payment of 3% might look like in Oregon, based on current home prices.
- As of November 2017, the median house value in Oregon was around $312,500.
- A 3% conventional down payment on that amount would come to $9,375.
- An FHA loan down payment of 3.5% (the minimum) would come to $10,937.
Some people who use conventional mortgage loans to buy a house in Oregon make down payments of 20% or more. They do this for a specific reason. It allows the borrower to avoid paying mortgage insurance, which is generally required with a down payment below 20%.
Of course, not everyone can afford a 20% down payment on a house. And for those borrowers, there are financing options with a lower investment requirement.
Everything Is Pricier in Portland
The Portland metro area is one of the most populous parts of the state. As a result, the city tends to have higher home prices than the statewide average. In November, the median home value in Portland was $405,500.
- Using that price point, the minimum down payment for a conventional loan in Portland would be somewhere around $12,165.
- The minimum (3.5%) down payment for an FHA-insured mortgage loan would come to around $14,192, on a median-priced home.
- A 20% down payment in this price range would amount to roughly $81,100.
This is based on the median, or midpoint, for house values in the area. Your down payment could be significantly less or more than these figures, depending on the price of the house you are buying.
The bottom line: The minimum down payment for a conventional loan in Oregon is lower than most people think. Surveys have shown that many home buyers believe they have to put down at least 20% when buying a house. But that’s not the case. Depending on the type of loan you use, the minimum required investment could range somewhere between 3% and 3.5% of the purchase price.