Santa Monica, California offers the best of Orange County living: great shopping, fabulous entertainment, beautiful beaches, world-class restaurants and more. Many people who visit the area decide to become more than just tourists. The real estate market here is a very desirable one for both prospective residents and businesses.

How Down Payments Can Affect a Mortgage

One of the primary considerations when shopping for a home in Santa Monica is how much money will be put down up front. A lot of the major economic factors of a mortgage loan will depend on the amount of the down payment, including interest rates and amortization schedules. Those with a down payment of 20 percent or more of the loan amount generally won't have to pay for private mortgage insurance, which can be quite costly.

When reviewing a loan application, lenders like to know where the money comes from that makes up a borrower's down payment. This is called verification of assets, and its purpose is twofold: to safeguard the lending institution from fraud, and to get a better picture of the qualifications of the borrower. Borrowers with a substantial down payment that originates from savings are generally in a better bargaining position.

However, this doesn't mean one with little or no down payment will have a hard time finding a loan. Lenders are increasingly creating mortgage programs that cater to those who may be short on up-front cash, but have great credit history. Even those with bruised credit may qualify for some programs, detailed descriptions of which are available for review on the Internet.