4 Key Questions About Down Payments
Down payments can be a challenge to navigate, even for experienced homebuyers.
How much do you need to put down? Do current market conditions change anything for you? Even the most basic questions aren’t always easy to answer.
Whether you’re thinking of buying soon or planning ahead for a purchase in 2022, now is a good time to clear up any uncertainties and come up with the right strategy for your household.
Take a look at these frequently asked questions, and reach out if you need a helping hand.
How much should your down payment be?
The minimum down payment depends on what type of mortgage loan you’re getting. Some loans (conventional and FHA mortgages) require 3 to 3.5%, while others (VA and USDA loans) require zero. Your credit score will also play a role in some cases.
Is a large down payment always better?
It depends on your budget and goals. A big down payment will mean a smaller monthly payment and fewer interest costs in the long run. If it eats into your emergency savings or puts you in dire financial straits, though, it’s probably not the best move.
What should you consider when setting your goal amount?
You’ll want to look at the price range you’re shopping in, your budget and the types of loans you’re eligible for. Talking to an experienced loan officer can help you get an accurate idea of what to expect.
Do you have to come up with all of it on your own?
Many loan programs allow “gift” funds, which means money given to you by your parents or another family member. You’ll just need a letter stating that the funds are a gift, not a loan, before you can use them.
