Buying in Tarrytown or central Austin and wondering how much you really need to put down? You are not alone. Between jumbo loans, PMI, and options like 80/10/10, it can be hard to see how your down payment will shape both your cash to close and your monthly payment. In this guide, you will compare the most common paths side by side and see realistic Austin examples so you can choose a strategy that fits your goals. Let’s dive in.
Down payment basics
Your down payment is the equity you bring at closing. A smaller down payment lowers your upfront cash but raises your loan amount and your monthly principal and interest. On many loans, a smaller down payment also adds mortgage insurance or requires a higher interest rate.
Loan type often depends on the price point. When your loan amount stays under the annual conforming limit it may qualify for conventional terms. Above that limit, it is considered jumbo, which typically has stricter underwriting and can carry a modest rate premium.
Common options and tradeoffs
Conventional 20% down
- You avoid private mortgage insurance (PMI) when your loan-to-value is at or below 80 percent.
- You may qualify for stronger pricing and terms compared with lower down payments.
Conventional with 3–10% down
- You can put less money down, but PMI applies until you reach enough equity to cancel it per lender and federal rules.
- PMI cost varies by credit profile and loan-to-value. It is typically paid monthly for borrower-paid PMI.
Jumbo loans
- Used when your loan amount exceeds the conforming limit. Jumbo loans usually require stronger credit and reserves.
- Rates often carry a small premium compared with conforming loans.
FHA, VA, and USDA
- FHA allows as little as 3.5 percent down for qualified borrowers. FHA includes an upfront mortgage insurance premium that is commonly financed into the loan, plus an annual mortgage insurance premium paid monthly. Duration of FHA mortgage insurance depends on HUD rules.
- VA offers 0 percent down to eligible veterans and service members, with specific rules for funding fees and concessions.
- USDA offers 0 percent down in eligible rural areas. Most addresses in central Austin and Tarrytown are not USDA-eligible.
80/10/10 piggyback
- Structure: 80 percent first mortgage, 10 percent second mortgage, and 10 percent down payment.
- Goal: avoid PMI with less than 20 percent down. Tradeoff: the second loan often has a higher rate and shorter term, which raises the combined monthly payment.
Gift funds
- Many programs permit gift funds from eligible donors for down payment and closing costs on a primary residence.
- Lenders typically require a gift letter, documentation of the donor’s funds, and proof of transfer. Program rules vary, so your lender will outline the paperwork.
Seller credits
- Sellers can often contribute to closing costs and prepaids within program limits. For conventional loans, typical caps depend on your down payment: up to 3 percent when you put down less than 10 percent, up to 6 percent for 10 to 25 percent down, and up to 9 percent when you put down 25 percent or more.
- FHA often allows up to 6 percent toward buyer closing costs. VA allows seller concessions within specific limits. Credits do not count toward your down payment, but they can reduce your cash to close.
Real Austin examples: cash today vs monthly cost
Below are simple, apples-to-apples illustrations. These are not quotes. Assumptions used in all examples:
- 30-year fixed first mortgage
- Conforming rate: 6.75 percent
- Jumbo rate: 7.25 percent
- PMI on conventional: 0.60 percent annually
- FHA upfront mortgage insurance premium: 1.75 percent financed into the loan, annual MIP about 0.85 percent
- Closing costs and prepaids estimated at 2.5 percent of the purchase price
Central Austin example: $600,000
This price point fits many central Austin condos and smaller single-family homes.
Scenario A1 — 20% down conventional
- Down payment: $120,000
- Loan amount: $480,000 at 6.75 percent
- Monthly principal and interest: about $3,112
- Approximate cash to close: $135,000 (down payment plus $15,000 estimated closing costs)
- No PMI
Scenario A2 — 5% down conventional with PMI
- Down payment: $30,000
- Loan amount: $570,000 at 6.75 percent
- Monthly principal and interest: about $3,696
- Estimated PMI: about $285 per month
- Combined monthly (P&I plus PMI): about $3,981
- Approximate cash to close: $45,000 (down payment plus $15,000 closing costs)
- If the seller provides credits within the conventional 3 percent cap at this down payment level, those credits could fully cover the estimated closing costs. Your out-of-pocket could be just the $30,000 down payment.
Scenario A3 — FHA with 3.5% down
- Down payment: $21,000
- Base loan: $579,000 plus financed upfront MIP of about $10,132 equals a total insured loan near $589,132
- Monthly principal and interest: about $3,819
- Estimated monthly FHA MIP: about $417
- Combined monthly (P&I plus MIP): about $4,236
- Approximate cash to close: $36,000 (down payment plus $15,000 closing costs). Seller credits may reduce closing costs, subject to program limits.
What to notice: dropping from 20 percent down to 5 percent down cuts your upfront cash by about $90,000, but the monthly payment rises by roughly $869 in this illustration. If a seller covers your closing costs, you can get in with just the down payment.
Tarrytown example: $1,500,000 single-family home
Tarrytown is a higher-priced central neighborhood. At this price, you are likely in jumbo-loan territory.
Scenario B1 — 20% down jumbo
- Down payment: $300,000
- Loan amount: $1,200,000 at 7.25 percent
- Monthly principal and interest: about $8,184
- Approximate cash to close: $337,500 (down payment plus $37,500 closing costs)
Scenario B2 — 10% down jumbo
- Down payment: $150,000
- Loan amount: $1,350,000 at 7.25 percent
- Monthly principal and interest: about $9,207
- Approximate cash to close: $187,500 (down payment plus $37,500 closing costs). Seller credits can reduce closing costs within program limits.
Scenario B3 — 80/10/10 piggyback
- Down payment: $150,000
- First mortgage: $1,200,000 at 7.25 percent, P&I about $8,184
- Second mortgage: $150,000 at 8.5 percent amortized over 10 years, payment about $1,859
- Combined monthly: about $10,043
- Approximate cash to close: $187,500 (down payment plus closing costs). No PMI, but the second loan increases the monthly total.
What to notice: the 80/10/10 keeps your cash outlay similar to 10 percent down, and it avoids PMI. The tradeoff is the second loan payment, which raises the combined monthly above the single-loan options.
Gift funds and seller credits working together
You can pair gift funds with seller credits to lower your cash at closing. For the $600,000 example with 5 percent down, a $30,000 gift could cover your entire down payment. If the seller provides credits that cover the estimated $15,000 in closing costs within program limits, your out-of-pocket at closing could be $0 in this scenario. You would still need to qualify for the loan based on income, assets, and credit per program rules.
Choosing the right path
Start with a clear plan for both cash to close and monthly comfort. A few steps can help you decide:
- Get pre-approved and request a Loan Estimate. This document outlines your monthly principal and interest, mortgage insurance if applicable, and line-by-line closing costs so you can compare scenarios with real numbers.
- Decide how you want to balance cash today vs monthly cost. If preserving liquidity matters, a lower down payment or 80/10/10 may fit. If a lower monthly payment matters most, 20 percent down can help by avoiding PMI.
- Confirm seller credit limits for the program you choose. For conventional financing, typical caps range from 3 percent to 9 percent based on your down payment. FHA often allows up to 6 percent, and VA has specific concession rules.
- If you expect bonuses or stock vesting, ask your lender how a future principal paydown or second-loan payoff would work. Some buyers choose a piggyback now, then pay down or refinance the second later.
- If you are eligible for VA, compare it side by side with conventional and jumbo options. For USDA, check eligibility outside central Austin if you are open to rural areas.
- Explore down payment assistance. City of Austin, Travis County, and statewide programs like TSAHC or TDHCA may offer assistance based on income and price caps. Availability and rules change, so check current program details.
Practical reminders
- Mortgage rates, PMI, MIP, and program rules change. The examples above are illustrative only, using the assumptions listed.
- Conventional borrower-paid PMI can often be cancelled when you reach sufficient equity per lender and federal rules, and it is often automatically removed at a defined equity point.
- FHA mortgage insurance duration depends on your original loan-to-value and HUD guidance. Ask your lender how long MIP would apply for your scenario.
- Jumbo loans may require additional reserves and stronger credit. Your lender will outline exact requirements.
If you want a side-by-side comparison tailored to your Tarrytown or central Austin target home, reach out. We can connect you with preferred local lenders, help you negotiate seller credits when the market allows, and craft a plan that balances cash at closing with monthly comfort. Connect with Michael Mechler to get started.
FAQs
How much should I put down to buy in Tarrytown?
- It depends on your goals. Many Tarrytown purchases use jumbo loans, so 20 percent down avoids PMI and keeps monthly costs lower, while 10 percent down or an 80/10/10 can conserve cash but raise the monthly payment.
Can I avoid PMI without 20% down?
- Yes. An 80/10/10 piggyback avoids PMI with 10 percent down by adding a second loan, though the second typically has a higher rate and shorter term that increases your combined monthly payment.
Do seller credits reduce my down payment?
- No. Seller credits generally apply to closing costs and prepaids within program limits. Your minimum down payment requirement does not change.
Are USDA loans available in central Austin?
- Most addresses in central Austin and Tarrytown are not USDA-eligible. If you want USDA, consider eligible rural areas outside the urban core.
Can gift funds cover all of my down payment?
- Often yes for primary residences, subject to program rules. You will need a gift letter and documentation that the funds came from an eligible donor and are not repayable.
When can I remove PMI on a conventional loan?
- Borrower-paid PMI can often be cancelled when you reach sufficient equity and is often automatically removed at a defined equity point under federal law. Your lender can confirm the process for your loan.
