It can be daunting to consider making a down payment on a house and first-time buyers may be unsure how big that down payment should be. Generally, your down payment is determined by your purchase price, your savings, and the type of loan you're applying for.
The normal rule is that a conventional mortgage, underwritten by a bank, a mortgage company, or a savings and loan, requires a 20% down payment. If you're selling your home to buy another one you may have enough equity to make a 20% down payment. However, first-time buyers sometimes have trouble coming up with this amount of cash.
One way around this is to pay private mortgage insurance (called PMI). FHA loans can require down payments as low as 3% and VA loans can help you buy a home without any down payment at all. There are other loan programs available for first-time buyers; ask your real estate agent for more information.
Questions? Contact us today!
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