There are a lot of rumors that fly around the term “down payment,” so much so that a lot of people don’t believe they can purchase a home without a sizeable chunk of money tucked away in their savings account. In reality you don’t have to have a 20% down payment to buy a home, which is great news!
The percentage of a down payment you need depends on two things:
First, the type of loan.
There are several different types of loans for buying a home.
- Conventional Loans require 20% of the purchase price paid up front.
- FHA Loans require 3.5% of the purchase price paid up front.
- VA Loans, don’t require a down payment.
Second, the amount of the loan.
How much your down payment will need to be will depend on the amount of the loan and what type of loan you qualify for. If you have served our country in the military you should qualify for a VA loan which means you are not required to have a down payment.
Here is the simple math to determine the down payment for someone with an FHA loan:
If the purchase price of the home is $100,000 and a 3.5% down payment is required, you would need $3,500 for a down payment.
$100,000 x .035 = $3,500
For someone with a Conventional Loan, this is the simple math to determine the down payment required:
If the purchase price of the home is $100,000 and a 20% down payment is required, you would need $20,000 for a down payment.
$100,000 x .20 = $20,000
Owning your own home has many benefits, including financial benefits. You may think it’s not in the cards for you, but how do you know unless you ask? I would be happy to put you in touch with a mortgage loan officer to help you find out which loan is best for you and how to make your home buying dreams a reality. Call me, Jill Bell, at 479.799.3023.