The NMWelcomeHome Team Blog

Don't let the down-payment get you down!

Coming up with a down-payment for a home purchase can be a major roadblock for some. This is often the reason for renting, rather than owning, a home. A "down-payment" is the difference between the home's purchase price and its mortgage amount. The down-payment must be paid up-front and can vary by lender, location, and loan program. A higher down-payment generally translates into lower loan interest rate. Down-payments typically come from personal cash savings, but it can also be a borrowed amount secured by assets. Our mortgage calculator can be used to figure out monthly payments of a home mortgage loan, based on the home's sale price, the term of the loan desired, buyer's down payment percentage, and the loan's interest rate.

So what is a typical down-payment? Conventional loan down-payments range from 5% to 20% of the sale price.  Government loans typically have lower down-payment requirements. This allows potential homebuyers who normally cannot meet down-payment requirements an opportunity to qualify for a mortgage. One thing to keep in mind is that down-payments that are less than 20% of the sale price typically require mortgage insurance payments.

What can lower my down-payment amount?

Government Loan Programs - Federal Housing Administration (FHA) and the Department of Veterans Affairs (VA) may offer assistance in paying your up-front cash requirements. These programs can significantly reduce your down-payment requirements.

Private Mortgage Insurance - Private insurance companies that offer you the opportunity to finance the upfront mortgage insurance to help reduce upfront cost.

Don't hesitate to try to get a loan because there are programs and organizations that can help you with your down-payment. Get Lender Qualified here.

Resources:

Mortgage Calculator

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