How Much Should You Save for a Down Payment?
Here’s how much you’ll need for a down payment with each of the common loan types.
How much down payment do you need to buy a home? It depends on the type of loan you qualify for, so I’ll share some of the most common ones:
Conventional loans. You need at least 20% or more down, and this is a popular option because you won’t have to pay for private mortgage insurance, which is an additional cost tacked onto your monthly payment.
FHA loans. This loan type only requires about 3.5% or more as a down payment. This is an option frequently chosen by first-time homebuyers who may not have been to save up as much money.
VA loans. This is another wonderful loan option if you or your spouse have been in the military. For these loans, you don’t need any down payment at all.
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Closing costs are a category of additional expenses that some buyers aren’t aware of. They need to be paid for with liquid cash at the close of your sale, and are usually 2.5% of the purchase price. So, when putting money aside for a down payment, don’t forget to save up for closing costs as well. I've been successful with many transactions in which buyers ask for the closing costs to be covered by the seller, so that may be an option to try during the negotiation process.
We want our clients to feel empowered and have the resources to become homeowners in the near future. Feel free to reach out via phone or email if you’re still uncertain about down payments or have any other questions. We would love to be your real estate resource.