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Lots of potential home buyers worry about their down payment when purchasing a home. Though 20% or more will give you better rate options, it’s still possible to buy a home without having a zillion dollars to put down. How much money will you need? We’re breaking it down for you. Take a look at what you’ll need for a down payment for some of the most common types of mortgage loans.
You can buy a house with an FHA loan with a down payment as low as 3.5%. Because the Federal Housing Administration issues and insures the loan, they require less cash down. Individuals with lower credit scores who sit in the low to moderate-income bracket can take advantage of this type of home loan.
VA loans are one way to buy a house with no down payment. You must be a veteran or active member of the military or an eligible surviving spouse to qualify. The loans are through private lenders and mortgage companies, but the U.S. Department of Veterans Affairs guarantees them, which is why they can offer them with low rates and no down payment.
A conventional loan is the most common for homebuyers in the U.S. Many people believe you must have 20% to put down to qualify for a conventional loan, but that is not the case. You can put down as little as 3% in some cases, depending on your credit score. The more you put down, the better your interest rate will be. The biggest difference is that if you put down less than 20%, you must pay for mortgage insurance premiums, which will increase your monthly mortgage payment.
Does all of this sound a bit confusing or overwhelming? Don’t panic – we’ve got your back. Contact the experienced mortgage professionals at Midland Mortgage Corporation to find out more about what you qualify for and how much you’ll need for a down payment.