A down payment is the initial payment that you put down for the purchase of your home. The remaining balance of that home is then financed as a mortgage but the down payment may affect certain details of the mortgage, such as the interest rate. The down payment will help offset the borrowers risk by showing that there is no likelihood of foreclosure.
Where do you get money for a down payment:
- The money can come from your personal savings - Years of saving have finally paid off! You can use funds in your savings as a down payment.
- The money can come from selling your previous home - If you sold your home and received money from the equity of your home, you can use those funds towards the down payment of your next home.
- The money can be gifts from family - As long as these funds do not need to be repaid, you can certainly use a financial gift from family.
General Rule: Most Loans require at least a 3% minimum down payment and with a 20% down payment you can typically skip the private mortgage insurance (PMI). Saving you thousands!
How much will you need for a down payment?
Once you have been pre-qualified we will know what type of loan and payment you best qualify for. We will know whether we need 3%, 5%, 10%, or 20% and will help you determine that amount.
Keep in mind that programs are often available that can help with down payment and closing costs. Ask us if there are any programs available in your area so that you don't have to use any of your personal funds for the down payment. Act Fast! These programs end once funding is gone. Let's discuss your options!