It depends on the type of mortgage you are going with. I have two clients right now who are in the process of a "rural housing loan". This loan allows for 100% financing plus. In other words, if they are buying the house for 200k and the house appraises for $230k, they are allowed to take out mortgages of 230k and use the 30k for whatever they want.

Best way to know what YOU can do is to spend 15 minutes with a lender and let them tell you.

"Best way to know what YOU can do is to spend 15 minutes with a lender and let them tell you."

A mortgage broker would be a batter choice.

A lender is only going to tell you about their products.

Also be careful. The lender (and even mortgage brokers) may not understand your comfort level with payments.

Our buyer had to put down 20% of the contract price, but the underwriter would only lend 80% of the appraised price - so there was another $15K cash that had to be negotiated between us.

We have an FHA loan and only had to put down 3.5%, but we have really good credit. Not sure if that made a difference or not.

The "new" rules are WAY over-hyped. Many lenders have gone back to traditional practices of 20% down. Some are still working at 5% or even 0%. If you go that route, you really need to shop around. Home prices are still falling in many areas, so anyone making a 5% down loan is taking a big risk. Businesses taking risks need to have bigger rewards. Their "rewards" come out of your pocketbook, so make sure you know what you are signing up for.

As for using a broker - that is a mixed bag as well. It saves you the time of talking to multiple lenders. If you don't know what type of options are out there, a broker can fill in the gaps and recommend different products. However, one of the under-reported parts of this crisis is that brokers were making horrible recommendations for clients. They were getting kickbacks for tricking borrowers into more expensive loans. Ultimately, you are the one who is going to be responsible for repaying the loan, so you need to take responsibility for understanding it.

Thanks for the info! I am not sure I would want to work with a mortgage broker again. I would rather shop around on my own and then call citibank or another big bank myself. My current one is thru Citi, so maybe I will call them. As far as what I can afford, I will be downsizing from a 300k house to a 200k house and have never been late on a payment in the 7 years that I have owned my house, so hopefully they will see me as a good "risk"

"I am not sure I would want to work with a mortgage broker again."

Mortgage brokers often have access to lenders you will never find since they do not market to the public.

They do not want to deal with all the work the broker does for his commission.

While there may have been mortgage brokers fleecing customers, Countrywide (and its follow on Indymac) did plenty of there work directly, even issuing bonds backed by the low quality mortgages they had written that other lenders purchased.

I have been using the same couple of mortgage brokers for many years now, and while some have changed companies, they have always provided me with very good service for both my residence and investment loans.
Like calling when rates fell below 5%.