Down Payment: How much you should save to buy a home

Is buying a home on the horizon for you? Have you started to save up for the down payment? Let’s first start with the basics of what a down payment is. A down payment is the amount of money you will spend upfront to purchase a home and is typically combined with a home loan to fulfill the total purchase price of a home.

How much do I need to save for my down payment?

The higher your down payment is, the lower your monthly mortgage payments will be. This will also depend on what type of loan that you get. Different loans require different amounts for the down payment. Typically you will need to save 5 to 20 percent of the sale price in cash in order to qualify for a conventional loan (30-year fixed mortgage). Down payments for jumbo loans can be as low as 5%. If you put down less than 20 perfect on a conventional loan, you will most likely have to pay mortgage insurance.

Low down payment financing options

Saving for a 20 percent down payment might be too difficult or take too long for many first-time home buyers or borrowers with lower household incomes. Other loan programs offer as low as zero to 3.5 percent down payment option, although a zero down-payment option is more difficult to get. The most common programs for the lower down payment mortgages come from the Federal Housing Administration (FHA) Most FHA loans require a minimum 3.5 percent down a decent credit score in order to qualify. Additionally, these types of loans are federally insured to reduce the risk of loss if a borrower defaults on their mortgage payments.

If you meet the eligibility guidelines, you may be able to qualify for a home loan with a zero down payment through the Veterans Affairs (VA loan).

Here at First Ohio Home Finance we are determined to find the right loan and down payment amount for you and your budget. Call us today so we can get started!