WHat is the average deposit on a new (built) house?

[PaulaSue]

What is the average percent of the selling price?

Going by my townhouse selling I thought you just had to put a thousand or 2 down. Dh informs me it is different with buying a new house from a builder.

TIA! Just trying to plan ahead if we find something we like.

 

[donaldseeyore]

It really truly depends on the financing you have. It can be 0 down to 20% down.

 

[Crazy Hakim]

Just shooting from the hip, I would say between 10% and 20%

 

[pnutmnm]

This was back in 2001: We had to put down $5,000 before they would even start. That was all that was required at the time. After we closed on our old house, we put an additional 15% down.

 

[ImaFunMom]

I guess it varies - I know that with VA, you can go with 0 down. Not sure about conventional loans. We've always had 20% or more to pay down, other than our 1st house - on that one we paid down 10% and had a PMI payment each month of around $50. The PMI (private mortgage insurance) is for loans with equity less than 20% and is charged until you reach 20% in equity.

 

[Chelley00]

When we built our house, it was a required 3%. We put more down than that, though.

 

[StitchandPooh'sMom]

Is it a custom house, or a spec house? Do you own the lot, or does the builder? When we have bought a spec house or had a house built from a builder's plan, we have either put $10,000-20,000 down at the time the contract is signed and/or paid out of pocket for any upgrades. The thought process for the builder is that he does not want to put a bunch of upgrades in a house and not be able to recover the cost if you back out. It depends on where you are in the process. If you are just picking colors and light fixtures, you will likely have to put less down than if you are making floor plan changes, picking out countertops and upgrading cabinets. Any earnest money/deposit you put down will come off the sales price at closing. If the house is ready for occupancy, the percent down should be more a function of your mortgage since the builder has already put the cost into the home and will recoup at closing. I think there are two issues - earnest money/deposit for the house and any changes, and actual percentage of the selling price to qualify for the mortgage.

If you own the lot and are building a custom house, he is going to want all the money (in a few bank drafts as construction proceeds). He can't sell the house without the land if you default. Then it is up to your mortgage company/bank to make it work with the construction loan.

I'm not sure what happens if you don't have the cash to put down as earnest money - I don't know if there is some way to get it (like a bridge loan?) then roll it into your mortgage.

Generally, if you put less than 20% down when you get your mortgage, you will have to pay mortgage insurance (I think that is still correct with all the changes in lending).

Hope this helps - I wasn't sure if you were asking about percentage a bank would require for a mortgage or money a builder would require for a house that is not completed.

 

[mpls_mm]

I am getting ready to build and was prepared to put down 10%, but the loan I qualified for was a 100%. This is a tough market for builders, you have the upper hand. You should negotiate hard. I would also do an end loan. For example, we agreed upon a price and he gets the money from my bank when the house is complete. It makes him finish faster and it protects you from whoops the price went up or we are delayed. I have heard of builders going under and people losing deposits. I also have it written in the contract a penalty for every day he is delayed past the date we agreed upon. I was an interior designer for years and I have seen all kinds of things happen. I never do the builders own financing, I always go through a big company and I lay out every single what if in a contract. I also note every selection, every color, every detail and make everybody sign everything. I can't tell you how many times builders put in the wrong carpet or counters etc.

 

[PaulaSue]

This was back in 2001: We had to put down $5,000 before they would even start. That was all that was required at the time.

Thank you! THis is what I had meant to ask. Sorry I wasn't more clear.

 

[PaulaSue]

When we built our house, it was a required 3%. We put more down than that, though.

Time for me to get the cobwebs out and do some math. Thanks!!!

 

[PaulaSue]

Is it a custom house, or a spec house? Do you own the lot, or does the builder? When we have bought a spec house or had a house built from a builder's plan, we have either put $10,000-20,000 down at the time the contract is signed and/or paid out of pocket for any upgrades. The thought process for the builder is that he does not want to put a bunch of upgrades in a house and not be able to recover the cost if you back out. It depends on where you are in the process. If you are just picking colors and light fixtures, you will likely have to put less down than if you are making floor plan changes, picking out countertops and upgrading cabinets. Any earnest money/deposit you put down will come off the sales price at closing. If the house is ready for occupancy, the percent down should be more a function of your mortgage since the builder has already put the cost into the home and will recoup at closing. I think there are two issues - earnest money/deposit for the house and any changes, and actual percentage of the selling price to qualify for the mortgage.

If you own the lot and are building a custom house, he is going to want all the money (in a few bank drafts as construction proceeds). He can't sell the house without the land if you default. Then it is up to your mortgage company/bank to make it work with the construction loan.

I'm not sure what happens if you don't have the cash to put down as earnest money - I don't know if there is some way to get it (like a bridge loan?) then roll it into your mortgage.

Generally, if you put less than 20% down when you get your mortgage, you will have to pay mortgage insurance (I think that is still correct with all the changes in lending).

Hope this helps - I wasn't sure if you were asking about percentage a bank would require for a mortgage or money a builder would require for a house that is not completed.

House's shell is built and we get to customize the colors, etc. We will be putting over 1/2 down at closing but I was unsure what the builder wanted.

THank you for all the info. It has been over 10 years since we bought this house and everything is foggy.

 

[bdcp]

Our builder wanted a $30,000 deposit in 2003. We ended up putting more before closing because of add ons and changes that they required deposits for. We eventually ended up putting 20% down, which the deposits were credited to at closing. This was a house that cost over $600,000. We used our equity line we had on our previous home to make the deposits and closed on the same day with the sale of previous home and purchase of new one, with two mortgages on the new home. We paid off the second mort on the new home after the check cleared from the sale of our first home (and payoff of 1st and 2nd mortgages we had on it at closing) but only because we didn't know for sure we were closing on our sale until that morning -another long story, so it wasn't set up. There are lots of ways to do it, but our builder required at least 30K. Ours sounds convoluted, but we cleared enough to pay off everything except our first mortgage on the new house and then some.

 

[PaulaSue]

I am getting ready to build and was prepared to put down 10%, but the loan I qualified for was a 100%. This is a tough market for builders, you have the upper hand. You should negotiate hard. I would also do an end loan. For example, we agreed upon a price and he gets the money from my bank when the house is complete. It makes him finish faster and it protects you from whoops the price went up or we are delayed. I have heard of builders going under and people losing deposits. I also have it written in the contract a penalty for every day he is delayed past the date we agreed upon. I was an interior designer for years and I have seen all kinds of things happen. I never do the builders own financing, I always go through a big company and I lay out every single what if in a contract. I also note every selection, every color, every detail and make everybody sign everything. I can't tell you how many times builders put in the wrong carpet or counters etc.

Thank you for all the tips. I will be writing all of them down for Dh and I went we go to sign the contract.

 

[PaulaSue]

Our builder wanted a $30,000 deposit in 2003. We ended up putting more before closing because of add ons and changes that they required deposits for. We eventually ended up putting 20% down, which the deposits were credited to at closing. This was a house that cost over $600,000. We used our equity line we had on our previous home to make the deposits and closed on the same day with the sale of previous home and purchase of new one, with two mortgages on the new home. We paid off the second mort on the new home after the check cleared from the sale of our first home (and payoff of 1st and 2nd mortgages we had on it at closing) but only because we didn't know for sure we were closing on our sale until that morning -another long story, so it wasn't set up. There are lots of ways to do it, but our builder required at least 30K. Ours sounds convoluted, but we cleared enough to pay off everything except our first mortgage on the new house and then some.

I heard of that, we might have to do that if they want more than a few thousand dollars right now. THanks!

Thanks Everyone!!! Please keep the Great tips coming!

 

[ExPirateShopGirl]

I put down $1500 to purchase/open escrow on the house which wasn't scheduled to be completed for another 3 months. During the course of escrow I paid for certain upgrades as they were installed or completed that were not included in the original selling price of the home. At the close of escrow I paid the balance of my down payment which was 20% - though the payment terms were really a deal between the lender and me, not the builder and me.

 

[Halbleib1]

You can have a loan with 0%-20% down however most builders require you to put down money at the time that you sign the contract. This is money you have to come up with. For example a home that we looked to purchase the contractor wanted 3000 down but if we were to make any changes to the floor plan even a small one we would have to put 6000 down. The only way to avoid this I was told was to get a construction loan from a bank. Very hard to get unless you have good credit and even than it may be hard today to do. BTW the money that we would have to put down we would not get back if we backed out of buying the home. If the bank were to back out of the loan it would be up to the builder to decide if he would give us our money back. The reason the contractor required so much down for changes is because depending on the changes the home maybe harder to sell if we were to back out.

We ended up buying a townhouse instead which we had to put a 1000 dollar down when we signed the contract. Had we of backed out of this contract for any other reason besides the bank denied our loan we would not have gotten this money back either. We got an 80/20 loan as we did not have any money down other than the 1000 dollars which went toward closing costs and we paid all closing costs oop. We do not have PMI even though we have a 100% financed home. There is a big misconception out their that you have to have PMI if you have a 100% financed loan. I recommend that anyone looking to go this route tell their mortgage broker or financial advisor that you do not want to pay PMI as it can be done. We also did not escrow our taxes as you end up paying them when they should be paying you for using your money. We take so much each month and put it into a savings account so that when it comes time to pay our taxes the money is their and we are earning interest on it. Also some will tell you that if you do not pay PMI monthly then you have to pay it up front this is not the case either. We have never paid any PMI EVER. Granted it may be harder to find a bank that does this esp. now with the mortgage crisis. If you do have to pay PMI the best way to do it is to pay it up front as you will save a good amount of money doing it this way.

 

[luv2nascar]

Our builder required $10,000 down in stages. $1000 lot deposit. $2500 once they were ready to start building. Then 2 more installments along the way. It was all laid out ahead of time as to how much and when. Also any upgrades or changes after the initial price was set you had to pay out of pocket. So more money cha ching

 

[snowbunny]

This is a tough market for builders, you have the upper hand. You should negotiate hard.

This is the key right here. The builder wants what he wants, but that doesn't mean you have to agree to it.

 

[tinatark]

The home building and home buying/selling forums on thathomesite.com are a great resource! There is also a ton of info there about everything from appliances/flooring/lighting etc.

 

[pearlieq]

Our first builder wanted 5k or 8k--I can't quite remember.

This time, they wanted 12k, in installments over the course of construction.