Nearly all home mortgage loans require buyers to make a down payment on the loan in order to buy a home. Following is some information that can help you know how much to save up towards this payment.
Experts note that the ideal down payment for any home is 20% of the home’s total cost. If your down payment is less than 20% of the home’s total value, you will need to purchase mortgage insurance. On the other hand, it’s unwise to drain your savings in order to put down a large down payment, especially if there is a chance you may need the money in the near future.
The required down payment varies depending on the cost of the home and your current credit score. The type of loan you take out also has a bearing on how much money you need to pay in order to get a home loan.
- The minimum down payment for a conventional loan is 5% of the home’s value. A 5% minimum payment is also required if you want to benefit from a low-interest rate FHA mortgage loan
- The FHA has a minimum 3.5% down payment rule for regular loans
- Special loan programs have a minimum down payment of 3% of the home’s total value.
- The VA and USDA Home Loan programs don’t require a down payment
It’s also worth noting that MIG mortgage company in Johnson City can provide down payment assistance loans as well as information regarding down payment grants available from local programs.
Generally speaking, the larger your down payment is the better. A large down payment can help to offset a less than stellar credit score, giving a lender confidence in providing you with a low-interest rate mortgage loan. Even those who have a good credit rating can benefit from saving up a considerable amount of money for a down payment and then paying off the home faster than would have otherwise been possible.
Talk to an MIG loan officer in Johnson City if you aren’t sure how much money to set aside for a down payment. Our experienced lenders can offer personalized advice that will help you make the best possible financial decisions for your personal situation.