How Much Money do I Need for a Down Payment for a Home Loan?
What You Need to Know About Your Down Payment
How much money will I need for a down payment?
Down payment amounts can vary based on a number of factors from loan programs to credit qualifications. In today’s market a 5% to 20% down payment is typical. But there are options for purchasing a home with a lower down payment. Some mortgage programs, such as a VA loan for military members, are available with no down payment. USDA loan also allow for a no down payment option. And many FHA loans require a down payment as low as 3 1/2%.
How can I obtain a loan with less than a 20% down payment?
Depending upon the loan program, mortgage insurance may make it possible for you to obtain a mortgage with a smaller down payment. Such mortgages are increasingly in demand in today’s home market because many potential homeowners, especially first-time homebuyers, are not able to accumulate the 20% down payment that would be required without mortgage insurance.
Can I use a gift to pay part or all of my down payment?
Gifts can be used to meet the cash requirements towards the down payment and closing costs. Gifts must be accompanied by a letter specifying that no repayment is expected and the source of the gift must verified by usually providing copies of the gift donor’s bank statements.
Can the person selling the home contribute to my down payment?
No, as this could result in an inflated selling cost. However, a home seller is usually allowed to pay the buyer’s settlement costs including closing costs, escrows and prepaid items, which can help free up more funds to contribute to the down payment.
Direct Finance Corp. is a mortgage broker that has completed thousands of mortgage loans including conventional, jumbo, FHA, VA, construction, renovation, 203(k), and reverse mortgages. We find the key to a smooth and successful mortgage is organization and communication. We help each of our clients to be well prepared, to gather the necessary documentation, and to understand the mortgage application process. Let us help you find the right mortgage today. Call Direct Finance Corp. at 877-499-7283 or submit our easy-to-use online request form.