If you are a first-time home buyer, finding the right home loan and mortgage options can be tough. You’re often left wondering, which option is best for my needs? How much money do I need to put down up front? Do I need a traditional mortgage or something else?
How much of a down payment do you actually need? Usual advice says that 20 percent of the home’s price is standard. This is daunting for many people, and with good reason: on a $350,000 home, 20 percent is $70,000, a huge sum of money to pay all at once.
But don’t let that number keep you from your homeownership dreams. A 20 percent down payment may be traditional, but it’s not mandatory. The truth is, it’s possible to buy a house with a much lower down payment, or even none if you qualify.
If you put down less than 20%, your monthly mortgage payments will likely include private mortgage insurance. Most conventional lenders will charge this additional fee every month as a safeguard against default. That said, certain loans allow borrowers 5%, 3.5%, or even zero money down. The amount you save toward a down payment will ultimately depend on the home loan product you qualify for. You may be eligible for the First Time Home Buyers Federal Home Loan Bank Grant to receive up to $7,500 in grant money to cover down payment and closing costs through Core Bank.
The median price for an existing home in the U.S. was $410,200 as of June 2023. A 20 percent down payment on a home at this price would come to $82,040. Regardless of price or loan type, though, keep in mind that the more money you put down upfront, the less you will have to borrow. Borrowing less equates to lower monthly payments, and less interest paid over the life of the loan. So, no matter what your loan requires as a minimum, it’s in your best interest to make as large of a down payment as you can afford.
Let us help you with the home mortgage process so you can own your first home and achieve the American dream. Core Bank’s team of lenders are committed to helping you achieve your dreams, whether you’re ready to buy, build or refinance your home. Contact someone from our team and apply today!