A major step in the homebuying process is paying the down payment on a house. Deciding how much to put down can be tricky, however, and affects both your mortgage terms and buying experience in a number of ways.
To help you make the best decision, here are some key facts about down payments buyers should know:
Minimum down payment on a house
The required minimum down payment to buy a house depends upon the type of loan you apply for. Conventional loans, while not backed by the government, follow the same regulations as government loans and typically require a minimum of 3% down payment.
FHA loans offered by the Federal housing administration require as little as 3.5% with a solid credit score.
Loans guaranteed by the U.S. Department of Veterans Affairs generally don't require a down payment at all. However, these loans have specific eligibility requirements and can have higher interest rates.
How your down payment affects your offers
When market conditions are competitive, sellers will receive multiple offers for the same property. A larger down payment can give you a competitive edge.
However, it's important to remember closing costs when budgeting for your home purchase. Be careful of opting for a down payment that will leave you unable to afford the other expenses associated with homebuying.
The ‘right' down payment amount is different for everyone
The amount of down payment to offer is different for every situation. With a lower down payment, you may be required to pay private mortgage insurance, increasing your long-term costs. Lower down payments can also mean larger interest rates, which can add up considerably down the road.
Down payment assistance programs are available for first time buyers who need extra help to afford cash up front. Keep this and other options in mind when planning for your home purchase to ensure the best possible financial outcome.
About the Author
Robin Anderson Real Estate
“My Passion is people and relationships and I promise to provide my clients with exceptional service tailored to their individual needs.” -Robin Anderson
Georgia native, Robin Anderson brings her passion for people and her love of homes to work for her clients. She and her husband, Andy, have been married for over 30 years and have two adult children, Ellen and Drew. They currently live in Fulton County, but Robin has lived and invested in properties throughout metro Atlanta as well as helped clients buy and sell. She has been integral to many real estate endeavors including designing and building several custom homes, remodeling homes, subdividing land, managing rental properties, and buying and selling properties. She spent her first 3 years in real estate working with a new home builder, and she has spent the last 6 years working with buyers and sellers in her own community. Robin is highly motivated but sensitive to the fact that buying and selling homes can be an emotional experience, so she makes it a priority to keep clients closely informed throughout the process and strives to produce quick results. She appreciates the opportunity to help her clients navigate the real estate process, and she aspires to deliver quality customer service that is both informative and positive. She is driven to provide outstanding service for her clients and she is focused on building successful and lasting relationships with her clients. This personalized service earns her enthusiastic referrals from clients she is pleased to call friends.Edit
