How Much Down Payment is Needed to Purchase a Home?
Although each lender has a specific requirement for determining your down payment, there are some common factors that lead to their decision. These factors are the purchase price, the length of the loan, your credit rating and whether you are a first-time buyer.
For conventional mortgages, down payments are normally 20% of the purchase price. These loans are targeted to buyers that currently have a home and want to upgrade. These are not the only loans available.
It is possible to reduce your down payment below the 20% range. For example, government-insured mortgages such as those offered by the Veterans Administration can help you achieve a lower down payment rate. First-time home buyers can find low down payment programs with local housing agencies and some commercial lenders.
Other options for lending and getting a great deal on your down payment can be achieved through your local credit union (if you belong to one). This type of funding varies with the credit union involved, your credit history, and your length of service with the company.
Don’t be satisfied if the first mortgage company requires a large down payment. Research other options until you find one that suits your personal needs. There are a large number of lenders that all want the possibility of funding your new home. Spending time locating the right lender will mean whether you are happy and secure in your home or always on edge.