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Minimum Down Payment for a ‘Typical’ Home in Portland, Oregon: 2018 Update

Home prices in Portland, Oregon have cooled considerably over the last year or so. But they’re still inching upward. That means the minimum down payment for a typical home in Portland has increased as well.

So where are we now? What’s the average or typical down payment for a home buyer in Portland, Oregon as of fall 2018? Here’s an updated look.

Minimum Down Payments in Portland, OR

As of early October 2018, the median home value in Portland, Oregon was around $422,300. That was the midpoint for the local real estate market. So half of all homes were priced above that level, while the other half were priced below it.

That’s a good figure to use for calculating the minimum down payment for a “typical” home purchase in Portland.

Here’s how it would break down under different mortgage programs:

  • Conventional, $12,669: Most home buyers in Portland use conventional loans (as opposed to FHA or VA). These loans offer down payments as low as 3% of the purchase price, for eligible borrowers. So if a buyer in Portland, Oregon made a down payment of 3% on a median-priced home, they’d be paying around $12,669.
  • FHA, $14,780: The minimum down payment for an FHA-insured mortgage loan is 3.5% of the purchase price or appraised value. So a person buying a median-priced home in Portland with an FHA loan would end up making a down payment of around $14,780 (as of fall 2018).
  • VA, $0: The Department of Veterans Affairs (VA) loan program allows home buyers to finance up to 100% of the purchase price. So a veteran or military home buyer in Portland could possibly use that program to avoid making a down payment altogether.

So that’s a quick overview of what the minimum investment would be for a median-priced home in Portland, with different types of mortgage loans.

More Than Half of All Buyers Put Down Less Than 20%

A lot of first-time home buyers in Portland, Oregon (and nationwide) believe that they have to put down at least 20% to qualify for a mortgage loan. Consumer surveys have shown this to be a pretty widespread misconception among first-time home buyers especially.

The truth is that the typical home buyer doesn’t have to put down 20%. As mentioned above, the minimum down payment for borrowers in Portland can be as low as 3% for a conventional loan. FHA allows borrowers to put down as little as 3.5%. And military folks who qualify for VA financing can finance up to 100% of the purchase price.

Here’s more evidence to debunk the 20% down payment myth. Zillow recently published an updated version of its “Consumer Housing Trends Report 2018.” It was based on surveys from 13,439 household nationwide.

Among other things, their in-depth analysis determined that 52% of home buyers in the United States made down payments of less than 20% when buying a property.

It’s also worth noting that many borrowers use multiple sources to come up with the funds needed for their upfront investment. For instance, a lot of borrowers combine money from their own savings with gift money provided by a family member. This is a common financing strategy.

The takeaway: The average down payment for Portland has risen a bit over the past year or so, due to home-price growth. But the mortgage industry is fairly flexible when it comes to these upfront investments. By using a low-down-payment mortgage option (possibly in conjunction with gift money from a relative), home buyers can reduce their upfront costs.

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