If you’re thinking of buying a new home, you may be asking yourself, “how much do I need for a down payment?” While everyone’s home buying situation is different, here’s what you can expect to pay upfront
for your first home.
What is a down payment? When applying for a mortgage, the down payment is the upfront contribution
you pay toward the purchase of a home. You may have heard that lenders require a 20% down payment,
but that’s actually just the threshold many use for requiring mortgage insurance on a conventional home loan.
How much do you really need? Realistically, most first-time buyers need at least 3% down for a conventional mortgage loan or 3.5% for an FHA loan. That means you’d need to save between $10,500
and $12,250 to purchase a $350,000 home. Bear in mind that you will have to put at least 20% down on
your mortgage loan to avoid having to pay private mortgage insurance (PMI), which protects the lender if
you default on your mortgage loan.
Do you always need a down payment? Certain federal home loan programs (VA or USDA) allow nothing down, but these have special requirements. In some instances, first-time buyers qualify for federal- or state-funded down payment assistance, so be sure to ask your real estate agent or lender what help is available.