Are you considering purchasing a home? You might be curious about the amount you need to save for a down payment. Traditionally, a down payment of 20% of the purchase price is required. However, there are mortgage options available with lower down payment requirements. Here’s an overview:
Down Payment Options:
20%: Traditional mortgage down payment, considered the standard.
3.5-10%: Down payment for an FHA mortgage, varying based on credit score, with income limits applicable.
0%: Down payment required for a VA mortgage or USDA mortgage, each with specific eligibility criteria. VA loans require military service history and property appraisal, while USDA loans have location and income requirements.
Can I Choose a Lower Down Payment?
Yes, you can opt for a traditional mortgage with less than 20% down, but you’ll need to pay Private Mortgage Insurance (PMI), which insures the lender in case of default. This premium is added to your monthly mortgage payment.
Can I Choose a Higher Down Payment?
Certainly, you can exceed the 20% down payment threshold, even up to 100%, eliminating the need for a mortgage altogether. A higher down payment lowers your monthly mortgage and may ease qualification, especially with credit or income limitations. However, consider the long-term costs of homeownership and maintain savings for potential future repairs or maintenance.
