How Much Do I Need For A Down Payment On A Home?

By
Mortgage and Lending with D A Griffin Financial.LLC NMLS 6380
https://activerain.com/droplet/5h4d

How Much Do I Need For A Down Payment On A Home?

 

How much money do I need for a down payment? I will count myself as rather surprised at how many home buyers think they need to save 20% for a down payment these days. Depending upon the loan program you could need no money for a down payment (such as a VA loan). There is a conventional loan that only requires 3% (if qualified). FHA minimum is 3.5% down. So there are several no or low down payment options. They may have some particular guidelines such as veteran status, credit score, property location, income, etc., that have to be met to qualify.

Of course the more one puts down affects the principal and interest payment, private mortgage insurance payment, etc.  Saving 20% down can be difficult, however, and something to be measured against delaying a purchase. What I hear most often is that home buyers think (a) 20% is the minimum down payment  or (b) the buyer doesn't want to pay PMI insurance.  

The fact is most of the first time home buyers I work with don't put down 20%.  If one were to weigh the option of saving the larger down payment against delaying a purchase for several years it is advantageous to buy sooner if one is going to be paying rent. Even if owning a home may not be a cheaper payment than rent,at least one is normally building some equity, as opposed to paying off someone else's mortgage. 

So the fact is, there are a variety of loan programs with little or no down payment requirements or the qualified borrower. For that matter several allow the down payment to be a gift, for instance from a relative.  Best practice when considering buying a home is to discuss the different down payment options with a loan originator. Then decide when is the best time to buy. No one knows what will happen to interest rates going forward but if rates go up a couple of points while saving a larger down payment it could wipe out the advantage of the larger down payment. 

I like to discuss the down payment options available to a home buyer and provide a comparison of how each program works to arrive at what is available. Then I can compare the pros and cons of minimum and maximum down payment as it relates to the monthly payment and overall goals of the home buyer. Key takeaway here is that in our market a typical first time buyer does not have to save up a 20% down payment for a conforming loan and assuming they are credit worthy. 

close

This entry hasn't been re-blogged:

Re-Blogged By Re-Blogged At
Topic:
Home Buying
Location:
Kentucky
Groups:
Mortgage Professionals
Cincinnati Real Estate
Mortgage Brokers
Mortgages
Realestateandfunding
Tags:
home buyer
down payment
20 down payment
how much do i need for a down payment on a home

Post a Comment
Spam prevention
Spam prevention
Show All Comments
Rainmaker
3,976,051
William Feela
WHISPERING PINES REALTY - North Branch, MN
Realtor, Whispering Pines Realty 651-674-5999 No.

There are some no down loans but more down the better rate yoiu may get

Jan 28, 2019 05:18 PM #1
Rainmaker
228,686
Dora Griffin
D A Griffin Financial.LLC - Fort Thomas, KY
NMLS 6380

William, thanks for the comment.  Many factors go into the pricing these days. Down payment is one of them. Have a great day!

Jan 29, 2019 07:56 AM #2
Post a Comment
Spam prevention
Show All Comments

What's the reason you're reporting this blog entry?

Are you sure you want to report this blog entry as spam?

Rainmaker
228,686

Dora Griffin

NMLS 6380
Ask me a question
*
*
*
*
Spam prevention