The brief answer is 3.5% down can make you a homeowner with an FHA loan on a 30-year fixed rate mortgage. The downpayment is figured out on the home price and the maximum high-balance FHA loan limit in your area.
If you’re in the market to get a home, our Realtors suggest you speak with a local mortgage advisor. Ultimately, this first step will save you time, energy, and money. Below are a few popular loan programs available in today’s market.
Home Mortgage Loans For You
Ultimately lenders smile when homeowners afford a 20% downpayment in their new home.
Most homebuyers swallow hard when they look at what a 20% down payment dent looks like in their pocket, but how much do you really need to stop paying your landlord’s mortgage and get inside that house of your dreams?
What Are the Benefits Of A 20% Down Payment on a Home Purchase?
Lenders encourage 20% down payments. Statistics show that it is harder to walk away from your mortgage obligation with this much skin in the game. Makes sense, correct?
On a home purchase of $500,000.00 20% down is $100,000.00. An incredible benefit would be reduced rates, but there are a handful of benefits to shell out that much dough.
A lower monthly payment (including PITI)
More equity for you off the bat
Typically fewer fees (loan fees)
What If I Don’t Have 20% Down For A Home Purchase?
If this is the case you are in the same boat as most homebuyers so don’t worry. Like our Real Estate Agents mentioned at the start of this article, you can actually purchase a home with as little as 3% down, but it can be expensive in the long term.
The Federal Housing Administration (FHA) is a government agency who helps home buyers — they also happen to have wonderful programs set in place to help first-time homebuyers become homeowners.
What is the Correct Down Payment Choice For Me?
The less downpayment you have squirreled away the higher risk you are for lenders that means more fees and higher rates — congratulations. One fee we don’t like to pay is mortgage insurance.
Mortgage insurance is an upfront fee and generally a fee bundled into your monthly payment PITI for the life of the loan and you may have to qualify for a refinance to shack the mortgage insurance fee after 20% equity is realized.
Okay, So I Want to Buy A Home. What Do I Do First?
Be smart and talk with a professional mortgage advisor who has your best interest and will guide you through the loan options such as taking time explaining the different fees.
Our Real Estate Agents understand it’s tempting to pick a lower down payment but you are smart to check at the big picture. The upfront investment of a down payment is a one-shot deal and the monthly payments last for many years that shouldn’t be taken lightly.