http://www.streeteasy.com/nyc/talk/discussion/5423-is-the-rate-i-am-getting-pretty-good

I saw this thread, and was shocked. I know nothing about conforming mortgages (we needed a jumbo, and the consistent message was 25-30% down). Are lenders really still allowing 10% down? How on earth is this a good idea?

I guess I wouldn't be shocked if they started doing this 3-5 years from now (since memories are short), but right in the middle of a financial crisis that is being proclaimed as the end of the world?

This tells me two things.

1) All the doom and gloom about no one being able to get a loan and thus the economy bordering on catastrophe is complete and utter BS/spin. Not only are people getting loans, but in the case of the posters on the board above, they are getting them for housing, with 10% down, and at pretty reasonable rates.

2) Until stupid practices like this stop, we won't begin to see the end of this mess.

I suppose if you have high quality assets you can get one.

My impression (and I haven't been actively shopping for a mortgage, so this is hearsay) is that you can get a 10% down conforming loan if you have really good credit, you'll end up with a reasonable debt to income ratio and have decent reserves. Honestly, even with only 10% down, that doesn't feel anything like the risks that banks were taking a few years back with negative amortizing and NINA loans, so it's silly to act like it's the same sort of problem.

nb99, calm down. that guy could be totally full of it. even if he is not, maybe the offering bank has very strict requirements on income, assets, etc. finally, even if it is true, conforming loans are only 80% LTV. the remaining 10% he gets will be very, very expensive indeed.

Yeah, nb99, no one has ever claimed that NO 10%-down mortgages were happening, just that they're getting rarer and rarer. I think people forget that mortgage-lending is a for-profit business, not a charity, and there's still money to be made in mortgages.

It seems lenders now are just being much, much more careful about whom they lend to. With a bulletproof borrower, I can see lenders jumping at the opportunity. A 6% or 7% return on a mortgage loan is a LOT better than what they can get committing their capital practically anywhere else these days. With solid, verifiable proof that a borrower can afford the property (and the negotiating room to gouge the borrower on an interest rate or in other ways), making a loan like that is pretty close to a no-brainer.

All fair points. It still feels like 10% down lending is just not the greatest idea (if the borrower is so credit-worthy, why not have him put more down, so he has more skin in the game?). But my point (2) should've been toned down at a minimum.

My point (1) stands, though.

I was the Op on that thread. While you were shocked, I was relieved to know that the bank was willing to give me the loan on 10% down. May be you are right that because I am doing a conforming loan the restrictions are not that strict yet. The bank has given me a commitment letter and I have already l locked the rate. But until I get the mortgage, I will always be nervous thinking that the bank may still do a roundabout and not honor its commitment.

Anyway, to answer your question – obviously the banks are still doing it (at least one or two). But as I am finding out, there aren’t a whole lot who are even entertaining < 20% dp. As JKB suggested it is still a business for them that they should be in – and I know I am not even close to a risky borrower.

I frustrated me when some banks turned me down because I didn’t have 20% to put down. How is having more cash on hand going to change the risk factor? I would have had another 10% saved up had I started on my job a year earlier. But again, my credit worthiness would still have been the same – a year ago, now or a year later.

Yes, lenders are still doing 90% financing on conforming loans. We are doing conforming loans at 90% with NO MI. Of course it isnt free and incorporated into the rate.

There are still many people that got into contract a year ago expecting to get 90% financing. If 90% financing is the only thing they can go with then we should be glad for them that 90% is still around. Its better than them just losing their deposit. Its just an available option. Banks arent going around telling everyone to buy with 10% down. But if that is their situation or they feel like only putting down 10% and they qualify, then why not? Maybe its a bad idea for people looking to buy to make money. But absolutely not for those buying the home they plan to live in. Of course they have to be credit worthy and prove income supports they monthly liabilities. sunny_hong@countrywide.com

Please dont bite...but we're still even lending 95% actually. Just stating the facts. Why we do it? I dont know but we do.

I shouldve put this all on 1 posting but we are financing 80% up to 1.5M and 75% up to 3M. If people arent qualifying for a mortgage its either because their credit isnt good, cant show sufficient funds, or they can prove their income to support their monthy obligations.

tbshkan - obviously nothing at all personal against you, or your ability to get a loan. To answer your question, there are at least two reasons why 20% down would make you less of a risk. 1) You would have double the skin in the game and thus that much less likely to walk away. 2) Since the apartment is the bank's collateral, the less they lend, the more over-collateralized they are.

I was going to say a lot more about the broader point, but I'll resist the urge, since it would at least border on political, which I've tried hard to avoid.

As an aside, I find it both funny and sad that Countrywide (yes, that countrywide) is still lending with 5% down. As I heard from a stand-up comedian, "you seen this one before...?"

you have to remember its not countrywide that is lending the bank just goes by Fannie Mae, and Freedie, if they buy the loan then countrywide will do the loan and just sell it right to the GSE, They are not a premier lender in anything outside the box (anything above the the $729k loan amount), (please Shong don't tell everyone how great you are!)

dledven...you sound angry. Are things slow?