How Much Of A Down Payment Do I Really Need?

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This is a question we often get in today’s world of mortgage lending. The answer will depend on a number of factors such as:

What’s best for you as our customer?

Which mortgage program is selected to match your needs?

What funds are available to complete your transaction?

There has been much confusion regarding down payments in today’s real estate purchase market. Recent surveys showed us that over 60% of first time buyers believe they need a 10% down payment to purchase a home. This is simply not the case.

Let’s set the record straight. There are many options available for home buyers today. From low down-payment options, fully gifted down payments and down-payment assistance, lenders who are serious about home purchase customers are doing their homework. The combination of planning, home buyer education and product selection can be a powerful tool to assist qualified buyers in achieving their dream to own a home.

Conventional loans are available with as little as a 3% down payment. There are also opportunities to finance a home purchase with gift funds from family members. We recently completed a purchase for a young couple using a combined gift from Mom, Dad, Grandma and Grandpa. The 5% gift from family allowed them to purchase their first home.

Government loans are another option with lower down payments. The FHA program only requires a 3 to 5% down payment and this can also be fully gifted by a family member. The Federal VA loan for veterans who qualify for benefits is a 0% down payment program. The USDA Rural Housing program is also a 0% down payment option.

In many cases today, home buyers may be better off to put less money down on a home purchase and keep funds in reserve to cover the expenses that can occur after you purchase your new home. Having a plan in place is the first step to selecting the right options when it comes to product selection and down payment decisions. We would always urge home buyers to acquire a Preapproval from a qualified local lender before beginning their home search. Knowing the options available and how to best utilize potential funds for down payment and other costs associated with a home purchase will give you the peace of mind to focus on that perfect home during the search process.

We would love to help you begin the process. Our Free, No Obligation Preapproval is a positive step in the right direction to home ownership.

–John Inzeo, Vice President, Wisconsin Mortgage Corporation

Categories: Home Buying, Mortgage, Quarterly Newsletter, Uncategorized

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