Oh, the beloved down payment. Rumor has it that you have to save up 20% of the house cost for a house down payment. Is that really true though? What is a down payment even for? If you’ve been wondering what is a down payment on a house, we’re here to help break down the confusion.
What is a house down payment?
A down payment on a house is the initial payment when buying on credit. Simply put, this is a chunk of money you pay up front to count toward the loan. A larger down payment can help you avoid paying mortgage insurance. But make sure you check with your loan officer, because there are lots of loan options where you don’t have to save up for a down payment.
Do I really need 20%?
Not always! But it will always depend on your scenario and what you are eligible for. FHA loans, for example, have down payment options as low as 3.5% available for qualified borrowers. There are even some loan programs that offer down payment options as low as 0% for qualified borrowers, as well. Yes, that’s right. ZERO. Not only that, but several (if not all) states have down payment assistance programs that you could be eligible for. So even if you do have a house down payment that is required, you may be able to get assistance to cover it, along with other closing costs.
Nice! So what now?
Check with your local loan officer to determine what your options might be. They will be able to review your documentation and your financial history to see what you would be eligible for. Make sure to inquire about any assistance programs for your state, and if you could qualify. From there, you’ll get a good picture on what you might need to prepare for. And could be on your way to happy homeownership.
Sure, the initial buying process can feel stressful. Especially when you’re having to worry about a possible house down payment, along with closing costs fees. But know that you have options, and there may be a whole lot less to worry about than you might initially think. For any additional questions or to see what you may be eligible for, contact one of our loan officers today.