Question: Is my home down payment added to the top of my home loan?

(Posted by: edgar on 2010-03-10 07:11:47)

We have been approved for a loan of 170, 000 with 10 % down. So does the 17000 go on top of the 170k making it a total of 187k or does it subtract from the 170k?

Posted by: Realtyyoudefine on 2010-03-10, 07:45:04

You are just about right with your first interpretation. If you are able to put down more, try to come up with 20% of the purchase price, then you won't have to pay PMI. What they are telling you is that you can borrow $170,000 and you must put down AT LEAST 10% of the price of the home in cash. In other words your loan to value would be 90%. $170,000 is 90% of $188,889 The difference between the 90% of price of the home and $170,000 is the amount you must come up with. So in theory you can purchase a home for $188,889, put down 10% or $18,889 and finance the balance of $170,000 You don't have to buy that expensive of a home; that is the largest amount you can be approved for. And whatever you pay for the home you must put down 10% of the purchase price. If you buy a home for $150,000 with 10% ($15,000) down, your mortgage would be $135,000.

Posted by: Sickness22 on 2010-03-10, 07:17:10

You can do that as long as you have enough for closing and the house appraises for enough to satisfy the bank. You can get the sellers to pay closing as part of the offer so you can drop all of your savings into getting the price down. You can also buy a house for less than that and put 10% down and get an even smaller mortgage.

Posted by: walidmrealtor on 2010-03-10, 07:29:22

The way you've worded this, you have been approved for a loan amount of $170,000. You must make a down payment for 10% of the purchase price (you've given us the loan amount, we would also need to know the purchase price). Your down payment should be subtracted from the purchase price of the home, i.e you could purchase a $157,000 home, though you've been approved for up to $170,000. In order to qualify for the type of mortgage you've been approved for - you will have to put down 10% or $15,700. If you purchase the $170,000 home, you would subtract your down payment, 10% or $17,000, in which case you would only be financing $153,000.