Down Payment
How Much Should I Save ?
The Amount you would need to put down entirely depends on the type of mortgage you get. If this would be your primary residence or an investment property, and if you qualify for any downpayment assistance program. Typically, it will be anywhere from 3% - 20% of the purchase price
What If This Will Be My Primary Residence ?
If you have a credit score of at least 580 you can qualify for an FHA loan, and will only to put down 3.5%. If your score is at least 620 you can qualify for a conventional loan, and will only be required to put down 3%. Veterans qualify for a VA loan and a down payment is not required
What If This Is An Investment Property ?
The minimum that is required is 15% - 20% depending on your credit score, debt-to-income ratio, loan program, and property type. To qualify you will need a credit score around 700 depending on the lender. However, if you make this your primary residence by getting a multi-family unit, you can get a FHA loan and will only need to put down 3.5%
Is A Larger Down Payment Better ?
A larger down payment is beneficial because you will have a lower interest rates and premiums. Larger down payments show the lender you are less of a risk, and with a conventional loan you can wipe out the mortgage insurance with at least a 20% down payment. You will also have a lower debt-to-income ratio which is important for a potential second home and/or future loans you may want to qualify for
Are There Benefits To A Smaller Down Payment ?
A small down payment can get you into a home quicker, which can be great depending on your situation. You can also instead use the money for repairs and renovations you may want to do on the property. Another thing to keep in mind is still maintaining an emergency fund and also money for other ventures that may arise
Down Payment Assistance Program ?
Saving for a down payment can be a hurdle, some people seriously struggle with. Looking into a down payment assistance program might be beneficial for you and worth checking to see if you qualify, and if it is the best move for you. Never be afraid to reach out and ask about them. It could be the difference between now and potential home ownership in your near future !
