Down Payment: How Much Should You Put Down?

Many prospective homebuyers wonder how much money they should plan to have for a down payment on their home. Here’s some advice on finding an amount that works for you:

What To Consider Before Making Your Down Payment

The simple answer to this question is to put down as much as you can afford without overextending yourself financially. Homeownership comes with many unexpected costs, from property taxes to homeowners insurance to emergency repairs. Plus, once you own a home, you’ll want to redecorate. All of these costs can add up to hundreds (or thousands) of dollars more than you planned.

What Down Payment Options Are Available?

For those looking for a low down payment, a 5% down payment option is available for many conventional loans. FHA loans can be a great way to purchase a home with a low down payment, as the minimum down payment requirement is only 3.5% of your mortgage amount. VA loans, which are available for eligible military veterans, have a zero down-payment option for certain loans. USDA loans, which are available for housing in rural areas, have a zero down-payment option as well.

For conventional loans, if you can contribute a larger amount to your down payment, you’ll have lower PMI (Private Mortgage Insurance) payments. You’ll need to make these payments until you’ve paid off 20% of your mortgage amount. You can avoid having to make PMI payments by putting 20% down when you purchase your home. This option works for some homeowners, but many choose to make a lower down payment and have PMI payments.

FHA loans may require mortgage insurance for the life of the loan depending on the Loan-to-Value at the time of loan closing

The information provided above is for informational purposes only and in no way constitutes legal advice or credit counseling. FHA, VA, and USDA loans are government-insured loans subject to specific program guidelines. Subject to credit approval and loan program guidelines.