Is a Low Down Payment Good Or Bad?

As a seller, should you be concerned that the buyer is putting a lower down payment? 

In my opinion, No. You shouldn’t worry so much about the down payment. 

It’s true that the downpayment is a good indicator of the seriousness of the buyer. However, I have had plenty of buyers come along who would offer to put these large down payments down, yet they had difficulty providing proof of funds or they were the type of people that’d say, “Oh, we’ve got the money, it’s not a big issue.” And then, when they go to qualify for the loan, they couldn’t even qualify.  

On the other hand, I had this situation were I had multiple offers, and something similar to that happened. But I also then got a VA offer from a veteran. And, you may  know, I’m partial veterans, because I’m a veteran. And when I looked at the offer, I mean, everything was solid. But guess what? He was putting zero down payment. Nothing. No down payment. 

But that’s one of the benefits of being a veteran. You get to have VA-insured loans that require no down payment.  Again,, as I went through the offer it looked great. The approval letter was clear, and when I called the lender and I talked to him, I said, “I want to see all the details of the approval before we accept their offer”.  The lender happily accommodated our request.

When I did that with the other people who were putting a large down payment they couldn’t give me as much of the details, as far as the approval goes. They weren’t fully approved yet. On the other hand, this veteran was. 

So, in that case, did the down payment matter? No. 

Does getting an offer with a large down payment kind of feel good about that particular buyer? Yeah, sure it does. Because, you know, it just feels like they have more skin in the game. 

But just know what it is that you’re looking at, and, hopefully, their agent knows what it is that they’re looking at, so that you can pick the right offer when the time comes. Especially If you have multiple offers. 

This is where my past experience as a lender comes into play.  I know what to look for to help make the sale smooth.