What is a “sliding scale”?

The larger a mortgage is, the larger the risk to the lender so to offset this risk, lenders will use something called a “sliding scale” to calculate the minimum down payment required.  If the purchase price is over $1-million, the minimum down payment will be 20%. However, once you get around the $1.25-million mark, most lenders implement this sliding scale calculation when determining the minimum down payment and mortgage amount. The sliding scale varies by lender but usually they will lend 80% on the first $1-million and then 50% on the balance.


Here is an example:

Purchase Price: $ 1,400,000
Lending value:  

         80% on the first $1.25-M


         50% on the balance ($150K)


Total Loan Amount

$ 1,075,000

Down Payment Required $ 325,000


If you have any questions about how the sliding scale works, please don’t hesitate to contact our office!