Down Payment Increases Crush the Dreams of Perspective Buyers

Is it buyer confidence or higher rates of down payment that are keeping new home buyers from purchasing? Many believe it's the down payments.

By Melanie Wilson

You look at the newspaper or the six o’clock news and most days the leading stories are about the mortgage crisis. Experts are saying that home buyers just don’t feel confident enough about the market to take the leap, but is that really the case? Not according to real estate developers in some of the top areas of the US.

People are actually looking to buy new property but just can’t afford the additional up front costs that are now being assessed. Many companies are asking for higher than average down payments and most are even requiring the purchase of private mortgage insurance to cover losses. If you don’t have at least 10 – 20% to put down toward a new home your chances of being approved for a mortgage, regardless, of your credit, are pretty slim.

In high priced areas, such as San Francisco, buyers may be required to put anywhere from $150,000 and up toward a down payment. This isn’t the only thing keeping buyers in high priced areas from getting the approval. High interest rates are forcing many to withdraw their bids for housing that they might have been approved for this time last year.

One of the great things about real estate is that it’s constantly fluctuating. It might seem like the market and the current economic climate is keeping you out of the home of your dreams but that’s only for the time being. It’s won’t always be so hard to get approve, it will just take lenders time to compensate for the failure of the sub-prime market.