Is it true that a borrower must have 5% of their own funds when putting 15% down on a primary residence?

Is it true that a borrower must have 5% of their own funds when putting 15% down on a primary residence?

• A. True
• B. False
• C. Only if it's a first-time buyer
• D. Only for investment properties

Answer: (B)

The correct response indicates that it is false that a borrower must have 5% of their own funds when putting 15% down on a primary residence. In many cases, lenders may not require borrowers to contribute a specific percentage of their own personal funds to satisfy the down payment requirement. For example, depending on the loan program, down payment assistance or gift funds from family members may be acceptable. In fact, borrowers can often use various sources of funds to meet the down payment requirement, including grants, loans, or funds that are not strictly the borrower's own savings. This flexibility allows borrowers who may not have significant personal savings to still qualify for a mortgage, provided they can meet other criteria established by the lender. Consequently, stating that a borrower must have a mandatory 5% of their own funds does not accurately reflect the diverse options available to those purchasing a primary residence.

The correct response indicates that it is false that a borrower must have 5% of their own funds when putting 15% down on a primary residence.

In many cases, lenders may not require borrowers to contribute a specific percentage of their own personal funds to satisfy the down payment requirement. For example, depending on the loan program, down payment assistance or gift funds from family members may be acceptable. In fact, borrowers can often use various sources of funds to meet the down payment requirement, including grants, loans, or funds that are not strictly the borrower's own savings.

This flexibility allows borrowers who may not have significant personal savings to still qualify for a mortgage, provided they can meet other criteria established by the lender. Consequently, stating that a borrower must have a mandatory 5% of their own funds does not accurately reflect the diverse options available to those purchasing a primary residence.