When buying a home, the amount of cash you put down towards the purchase price plays an important role in the kind of mortgage you qualify for.
The larger the down payment, the less you are required to borrow.
The standard down payment amount is 20% of the home's purchase price. For example, if you buy a house for $100,000 a 20% down payment would require you to put down $20,000 and obtain a loan for $80,000. Your down payment does not include closing costs.
If you can't put 20% down, your lender will typically require you to pay a mortgage insurance company to insure the lender against nonpayment or default on a mortgage. Mortgage insurance payments are included in your monthly payment.
Buyers with less than a 20% down payment, but at least 3.5% saved, could qualify for an FHA loan. This is a government-backed program that offers fewer restrictions on your down payment and qualifying credit score than conventional mortgages.
Whether you plan on buying a home in the next couple of years or further down the road, it's never too late to start saving for your down payment. There are several steps you can take to add more money towards your down payment each month:
If you have any questions or would like us to walk you through the various options, call 1-800-248-4638 to talk to one of our experienced mortgage representatives.