How Much Money Do I Need For A Down Payment?
That depends on what your goal is in financing. Typically, lenders will give lower rates if you put more money down, since it makes the loan "safer" for them. If you put 20% of the sales price down, it is very unlikely that you are going to walk away from the home and lose all of that money. The lender could easily re-sell the home and recoup their investment. Therefore they consider this a low risk to them. One other benefit of putting at least 20% down is that it also eliminates the required PMI (Private Mortgage Insurance) that is basically an insurance policy on the mortgage that YOU have to pay to protect the lender's investment. If 20% is not an option for you, then maybe an FHA loan that only requires a 3.5% down payment will work better.
Most people do not put 20% down on a home any more. There are lots of different loans that offer lots of different financing options. The best thing to do is speak to your lender about what it is you want to do and what your circumstances are. If you have a lot of cash reserves, it may be best to go ahead and put down a big down payment to make your rate and your payments lower. On the other hand, if you have almost no cash reserves, maybe a 96.5% FHA loan will work for you and you may even get the seller to pay your closing costs for you too.
So, to answer the question, there is no set amount or percentage that is needed as a down payment. Each loan is done on a case by case basis and the lender finds which loan and program will work best for you.
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The information contained on this page and website was written and produced by Dave Turnquist and is the sole property of San Jac Real Estate. No unauthorized reproduction or use of this information is permitted without the expressed written consent of Dave Turnquist, Broker/Owner of San Jac Real Estate