How come banks want 20% down to purchase a house or condo?

not all banks require 20% down, a good way to avoid paying PMI (private mortgage insurance) is get a combo loan 1 for 80% 1 for 20%...also if you have 10% down you can do a 80% 10% + 10% down, banks only require pmi if the loan amount is over 80%, they just want some kind of security if you default on the loan thats why they want insurance on anything over 80%..best of luck to you

Twenty percent is a good percentage because real estate can decline in value and in most cases the bank is still covered if the buyer walks or wants to move. If you buy a home for $100K and it declines to $80K-$89K and you get transferred by your company, the bank and you can both get your money out.

You can probably buy your house. PMI will be removed once you have a 20% investment in your condo. You don't need to get a mortgage with bank fees. Many companies will roll the bank fees into the mortgage. Figure out how much you can pay in bank fees and then let the lending entity know this information. Ditech is a big lender that can probably make things work for you. My lawyer friend in NY has closed a lot of properties where the lender was Ditech.

Firstly, you can find lots of banks that will take 10% down (and you can ask seller to pay your closing costs). I've bought repeatedly with 0 down.

Secondly, don't fall for the 80/20 garbage. People act like you're "SO SMART"! because it avoids PMI...but the second loan is generally at such a high interest rate (10-12% ) that you break even. And the thing with PMI is that as you pay down a little bit on your loan, and teh home appreciates, all you have to do is appraise and prove you have 20% equity, and the pmi dissapears.

With the 80/20, you ALWAYS have that high rate-- for the ENTIRE 30 YEARS, unless you refinance. And if you refi, you get closing costs. OH, and if you do the 80/20 you ahve two sets of closing costs when you purcahse too!

The above isn't accurate.

Anything less than 20% requires MI. This insure the bank is covered if you default on your loan. 20% is a lot of vested interest. And if you have 20% down, the likely hood of you defaulting is not as high if you did 100%

Not all banks require 20% down to avoid MI. There still more than a few that can get you 90% LTV with no MI. It is just the bank your broker choose for you or he or she only has the banks to choose from.

You don't always have to have 6 months reserves either.

I have been in the business for years and have many resources, so I know the above as facts. Ask your broker to do a little more investigating for lenders that don't require MI at 90% LTV.

http://www.myfinancialcorner.com

Most mortgage lenders love to approve easy "slam dunk" home loans where the borrower pays 20 percent or more for the down payment. The larger the down payment, the safer the mortgage for the lender so you will probably get the lowest available interest rate if you have good income and good credit.

Shop around. You contacted the wrong lenders who want to maximize their loan amount and their fees.

However, please don't tie up a major portion of your liquid assets in your next home. Don't be property rich but cash poor.

I suggest making up to a 25-30 percent cash down payment. Then you won't have a large amount of cash tied up, just in case you buy a "bad house."

banks and financial institutions are reverting back to "traditional loans"

that is normally a 30 year fixed, with 20% down, no pre-pay penalty and you also may have to prove that you have a min of 6 months of mortgage payments in an escrow account.

the reason is the soft real estate market and the high number of foreclosures that are happening every day.

good luck

for security as it lessens the credit risk. if they have to foreclosure on the house if you should default , there will be equity in the house already . you should not even try to buy the house right now if you are that close. it is a good time to rent and save your dollars. the foreclosures are increasing everyday due to interest rates people took on ARMS and they are charging more gas causing their credit card debt to escalate because they are not able to pay. their budget is too tight and they are living paycheck to paycheck. if you wait a year , you will probably be able to buy what you are looking at now for much less than what it costs right now. i would be patient and save as much as possible right now. get a much cheaper apartment than you have now, cut back on dinners, entertainment, etc. take a financial course to learn how to manage your money and make sure that your investments/ savings are making you as much money as possible.

to keep people who do not qualify buying a house.
you must have credit issues if they want 20% or are you buying it for investment?
you are more of a risk