How much deposit is required to get a home loan?

4th Dec 2009 by Michael Haltman

The deposit that a potential buyer puts down when they sign a contract to purchase a home, could also be called a "good faith" deposit. That is, when a seller goes to contract to sell their house, they are now unable to entertain other buyers. If a potential buyer were to tie the seller up for $10, then there is no "skin in the game", and they would have no problem walking away from the deal or in dragging the process out. For that reason, sellers will typically require that a buyer put a minimum of 10% of the sales price into an attorney escrow account, standing to lose it if they violate the terms of the contract. For example, if the sales price is $2,000,000, the buyer would need to come up with $200,000. For this reason, sellers will often look to see that a buyer has a mortgage commitment prior to signing a contract. While a commitment is no guarantee, it is a big step in the right direction.

This answer is the subjective opinion of the writer and not of FinancialAdvisory.com