When it comes to buying a home, saving for a down payment is the most intimidating part of the process for many buyers. If you have your eyes on a $300,000 home, you might need to bring as much as $60,000 to the mortgage desk. That’s no small chunk of change!
Still, if you’re on a real estate hunt, down payments are a part of the deal. Today we’re going to answer your burning questions about down payments and eliminate some of the uncertainty you might be feeling.
How Much Money Do I Need To Put Down on a Home?
Tough question! The answer varies depending on the type of loan you receive. In a perfect world, you’ll want to put at least 20% of the purchase price down on the home you plan to buy. If you do this, you’ll experience several homebuyer benefits. Even though you’ll pay more upfront, these benefits will save you thousands over the life of your loan:
- Lower monthly mortgage payments
- No private mortgage insurance (PMI) added to your monthly payment
- Lower interest rates
- Seller confidence in your offer
While a 20% down payment is ideal, only 38% of buyers put at least that much down on their home purchase. With an array of mortgage products available to accommodate countless financial situations, many buyers get away with a lower down payment.
Low Down Payments: What Are My Options?
What if a 20% down payment is insurmountable? There are plenty of loan programs with lower down payments, although you will need to meet their (sometimes strict) eligibility requirements. Here are the minimum down payment requirements for the major types of loans:
Saving for a Down Payment
If you’re putting money away for a down payment, you might need to take your savings strategy to the next level. In addition to earmarking a little money from each paycheck to put toward your real estate goals, here are a few ways you can increase your savings:
- Pick up a side job (grocery delivery, food delivery, freelance work, etc.) and put all earnings toward your down payment.
- Cut back on unnecessary spending, such as dining out or weekends away, and put the money you would have spent into your savings account.
- Sell your unused belongings and stash your earnings. Bonus: When it’s time to move, you’ll tote fewer items to your new home!
- Put money on your wish list for your birthday, wedding or any other gift-worthy occasion.
Contact Us Today!
Is saving for a down payment holding you back from reaching your real estate goals? Contact us at MortgageDepot to set a savings strategy or determine if a low-down-payment mortgage is a smart option for you.
Connect with one of our loan consultants today to learn more!