How Much Money Do I Need for a Down Payment on a House?

Dated: November 26 2020

Views: 183

How Much Money Do I Need for a Down Payment on a House?

You’re seriously thinking about buying your first home—probably one of the biggest financial transactions a person may make. But how much money do you need for a down payment? Here are four facts to know.

1.     Lenders prefer that you pay a down payment of at least one-fifth of the cost of the home, and they usually won’t lend more than 80 percent of its appraised value.


2.     If you’ve got great credit or if you qualify for certain loan programs you may be able to get a loan with less than 20 percent down, or even with no down payment at all, but you may be required to pay private mortgage insurance (PMI).


3.     If the lender considers you to be a borrower that presents a high risk because of your credit history, or other factors, they may require a larger down payment before they approve your loan.


4.     If you have the money you can always put more than 20 percent down on the cost of your potential new home. The larger the down payment the smaller your mortgage and monthly payments will be.

A simple mortgage calculator can be a helpful tool during your search for a new home. There are many free online mortgage calculators and mortgage amortization schedule calculators. Mortgage calculators estimate your monthly mortgage payment, and amortization schedule calculators show how much money you’ll pay in principal and interest over time. These two tools can help give you an understanding of how your monthly house payment will impact your finances.

And it’s always a wise move to establish a budget before you begin to look for homes so you don’t end up falling in love with a property that you simply cannot afford.

 Ready to Find Your Dream Home in Vero Beach?


Blog author image

Chip Boyer

Chip is the IT Manager for Alex MacWilliam Real Estate. He handles the technology needs of the company as well as helping agents in their day to day problem solving.....

Latest Blog Posts

3 Mistakes to Avoid if You’re Upsizing Your Home in Vero Beach

If you’re like many people buying a bigger home for sale in Vero Beach, you’re probably thrilled about having more space – but here are three mistakes you should avoid as you house

Read More

4 Common Questions From Homebuyers (And Their Answers)

When you begin your home search you want to know some of the things you can expect, like market conditions and steps during the home-buying process. Here are answers to some common questions from

Read More

3 Smells You’ll Miss on a Video Tour (But That Could Cause You Serious Issues if You Make an Offer)

The COVID-19 pandemic has changed the way we conduct real estate transactions. For many people, seeing homes in person just doesn’t hold the appeal it once did, and that means more video.

Read More

3 Ways to Keep Your Home Looking New

Just because your house isn’t new construction—and it may even be a little long in the tooth—doesn’t mean it has to look outdated. There are certain design concepts that can

Read More