Explanation of minimum down payment requirements:
Purchase price between $1 - $500,000 = 5% minimum down payment
Example - a purchase price of $400,000 is a minimum down payment of $20,000
Purchase price between $500,000 - $999,999 = Blended down payment
The minimum down payment is 5% of the first $500,000 and 10% of the remainder up to $1 million dollars.
Example - For a $700,000 purchase price the down payment calculation is 5% of the first $500,000 which is $25,000 and then 10% of the $200,000 which is $20,000, meaning a total down payment of $45,000
Purchase Price Above $1,000,0000 = 20% or sliding scale pending the lender and purchase price
We have lenderS that will allow 20% down payment up to $1,500,000 purchase price which is a down payment of $300,000 and a mortgage of $1,200,000. For purchase prices above $1,500,000 we typically see a sliding scale with the client having to put more towards the down payment the higher the price point.
As an example on a $2.5mil purchase, a lender may approve 80% of the first $1.5mil purchase price in the form of a mortgage, which is $1.2mil and then they will consider 60% of the remainder of the purchase price. That is 60% of $1mil which is $600,000. Meaning a total loan of $1.8mil on a purchase price of $2.5mil which is 72% loan to value (LTV) or $700,000 down payment which is 28%.
When we consider lending for purchase prices north of $1mil even as high as $10mil + we have lenders that may consider a down payment around 20% - 25% without the sliding scale pending the strength of the file and pending the lender which in some cases may be non traditional in nature. We have a lot of experience lending above $1mil and can help create a strategy case by case.