We say it all the time and you’ve probably heard it several times yourself: Buying a home will likely be among the most significant and sizeable purchases you will make in your lifetime.
As such, there’s a lot involved in the transaction – especially if you’re among the majority of people who aren’t able to pay cash for the full price of a home and you need to borrow the funds from a mortgage lender like us.
One of those factors is the down payment. Some borrowers disqualify themselves from buying a home before even speaking with a lender because they mistakenly believe they don’t have enough of a down payment to even be considered for a loan.
Here at Homeowners, we take particular pride in two things that are part of our mission to improve lives: educating potential homebuyers like you and helping you feel confident about the purchase.
That’s why we’re happy to answer these three questions about down payments that we hear pretty frequently:
Do I need 20% down to buy a home?
No! There are loan programs available that allow you purchase a property for as little as 3% down or even 0% down if you’re a Military Veteran.
Is it better to have a 20% down payment on a house?
For sure, if you can swing it. When you put 20% or more down on a home purchase, you avoid paying Private Mortgage Insurance (PMI). You’ll also have a lower monthly payment and may qualify for a lower interest rate.
Where can I get the money for my mortgage down payment?
Your down payment can come from a variety of sources, including:
- Your own savings or investments. Of course you can use your own money toward your down payment! Just don’t forget to check with us first to ensure the source of the funds is properly documented and you don’t put your loan in jeopardy if you have to move some money between accounts.
- Loans or gifts from family members. If you’re fortunate enough to have close relatives who are willing and able to help you own a home, funds from them are allowed, as long as everything is documented properly. If you’re going this route, be sure to let us know as soon as possible so we can make sure everything is handled correctly.
- Down payment assistance programs. You might be surprised at how many entities would be pleased to provide funds for your down payment. In some cases, these grants are fully forgivable (meaning, you don’t have to pay the money back if you qualify for the program and meet certain criteria). Check with your local Homeowners Licensed Mortgage Professional for more information about the down payment assistance programs that are available in your area.
Don’t let myths you may have heard about mortgage down payments prevent you from enjoying the many benefits of homeownership. Talk to us today to get the lowdown about down payments and feel better about your plans to buy a house!