If you’re planning to take out a mortgage to buy a home, you will likely need a down payment. In other words, you will probably have to pay some cash upfront in order to get a home loan.
How much money will you need to save up? Mortgage lenders often prefer 20 percent down payments, but you can buy a home with less. Here’s what to consider as you make plans to become a homeowner.
Though you can buy a home with less than 20 percent down, most mortgage programs have minimum requirements. They type of home loan you take out will dictate how much cash you will need:
With VA home loans and USDA loans, no down payment is required. These mortgage programs allow you to finance 100 percent of a property’s purchase price.
Keep in mind, though, that these are minimum requirements. You can choose to put more money down if you like.
Putting down the minimum amount required can be a smart approach for some aspiring homeowners. Reasons to pay less upfront include:
The more money you pay upfront when you buy a home, the smaller your home loan. Borrowing less money offers several benefits:
Furthermore, if you put down at least 20 percent when you buy a home, you can skip paying for private mortgage insurance (PMI). The annual cost of PMI can be as much as one percent of your home loan amount – and it can add hundreds to your monthly mortgage payment.
In the end, only you can decide how much money to put down. But if you want expert advice and guidance through the mortgage process, turn to the professional team at Integrity First Lending.
Our friendly loan officers have decades of combined experience in the Utah home lending industry. We can explain your mortgage options, answer your questions and help you shop for a home loan with excellent terms.
If you’re ready to buy a home in Utah, contact Integrity First Lending in South Jordan or Tooele to discuss your mortgage down payment and find your ideal financing solution.