Down Payment – How Much Money Do You Need?

If you are a first-time homebuyer, you will likely be intimidated by the purchase process and amount of down payment required. Buying a home is a huge step that takes a great deal of investigation and understanding – especially when it comes to figuring out how much you’ll need for a deposit and supplying the down payment to fund your investment.

There are many different types of loans which offer low or no down payment options. Although you may commonly hear that a minimum 20 percent down payment is required, this is not necessarily true in many cases.

BEHIND THE 20 PERCENT DOWN PAYMENT

Providing 20 percent of the total purchase price of the home up front has a number of benefits associated with it. If you are nervous about qualifying for a home mortgage, it may be worthwhile to save as much as possible for a down payment.

Additional benefits of opting for a 20 percent deposit include:

• More equity.
• Lower monthly payments.
• Lower upfront and ongoing fees.

ADDITIONAL OPTIONS

While saving up and paying a ton of money upfront for a home has its advantages, it isn’t always possible with some financial situations. Fortunately, there are additional options that offer low and even no down payment options. However, qualifying for these can be difficult. For example, a loan through the U.S. Department of Veteran Affairs does not require a down payment, but you must be a qualifying veteran or service member.

With low down payments, you will generally need to pay for mortgage insurance each month. For more information, it is best to speak with your loan officer.

Knowing what options are available – and the pros and cons – can help you as you settle on a plan for paying for your new home.

Understanding deposit options is crucial to creating a fantastic home-buying experience. At HDA Insurance Brokerage, our alliance of National Insurance Carriers will help you insure your home.  We’ll find the best Homeowners or Landlord Insurance Policy for you and your family’s needs.