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

Dated: November 26 2020

Views: 242

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?

Search:

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

The 5 Best Places to Catch the Sunrise in Vero Beach

If you're thinking about buying a home in Vero Beach, you probably already know that this community has tons of great places to watch the sun come up – but where are the best spots? This guide

Read More

3 Great Vero Beach Attractions Worth Checking Out

If you're thinking about moving to Vero Beach, you're not alone – this is an extremely popular area. After you get settled in, there are several fabulous attractions everyone should see. This

Read More

5 Great Places to Take Your Grandkids in Vero Beach

If you're a grandparent who's thinking about retiring in Vero Beach, part of your job is scouting out the best places to take your grandkids when they visit. We've got you covered with the five best

Read More

Is it Possible to Use a USDA Loan to Buy a Home in Vero Beach?

The United States Department of Agriculture (USDA) offers a variety of loans for rural and suburban homeowners, including the Rural Development Loan and the Single Family Housing Guaranteed Loan.

Read More