Money is a major topic when it comes to purchasing a home. Times have changed- and so have down payment requirements. Many people are surprised to learn that 20% of a home's sales price is not required to be approved for a home loan.
A down payment is a portion of the home's sales price that a homebuyer invests at the time of purchase. This amount is deducted from the sales price when financing. Closing costs are fees related to the financing process. They are also due at the time of purchase, and will be discussed in a separate post.
Different loan types dictate minimum down payment requirements:
- FHA: Government loans require at least 3.5% down. That's a huge relief to many homebuyers! For example, a home that costs $210,000 would require a down payment of only $7,350.
- Conventional: Private loans typically require 5% down. However, select buyers may qualify for as little as 3% down, usually based on credit score. At 5% down, a home that costs $210,000 would require a $10,500 down payment.
- VA: Veteran loans require no down payment. Thank you for your service!
If you are unable to save a down payment, there are many options available to assist you. State, city, and county organizations often provide down payment assistance for first time buyers, people with certain job types (such as teachers and first responders), and for homes in certain neighborhoods.
Talk to your LJ Group Realtor today about what your down payment options in your preferred area. We are not licensed mortgage loan officers, but we can cover basic program requirements for you to discuss with your lender.
Call (832) 654-8059 or email email@example.com for more information.