There are plenty of robust real estate myths out there, but perhaps none that have caused more confusion or frustration than the down payment amount! A recent NerdWallet study of 2,000 adults showed that 44% of Americans believe that you need a down payment amount of 20% or more – but thankfully that’s not true!
The amount needed for a down payment varies depending on the type of financing that a buyer is obtaining. Many new homeowners opt for FHA-backed mortgages, which allow down payments as low as 3.5%. Other buyers prefer conventional loans, which offer mortgages for just 5% down, but anything less than 20% down comes with a catch: you’ll be required to pay a small monthly fee called Private Mortgage Insurance (PMI) directly to your lender.
There are also options available with no down payment required. Veterans Affairs (VA) loans are available to qualifying military members and their spouses, and offer great terms and no down payment requirement, and USDA loans are a 0% down option for homes located in more rural areas.
Planning to purchase a new home this season? We’d love the opportunity to introduce you to a helpful, local, knowledgeable loan officer. Just give us a call at (215) 699-5555!