Everything You Need to Know About Down Payments
Posted by Mike Broadhurst on Friday, June 3, 2022 at 6:41 PM
By Mike Broadhurst / June 3, 2022
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Everything You Need to Know About Down Payments
What is a down payment?
- A portion of the price of a home that’s paid in cash
- Price of Home - Down Payment = Loan
- Expressed as a percentage of the total purchase price
- Percentage required to pay is dictated by the terms of your loan
How much should I put down on a house?
Ideal Down Payment = 20% of the purchase price of a home
Why 20%?
- Reduce your monthly mortgage payment
- Eliminate costly private mortgage insurance (PMI)
- Reduce interest rates
- Improve the competitive nature of your offer
What is the average down payment on a house?
- Typical down payment in 2021: 10-19% of the purchase price
- 59% of buyers put down less than 20%
What is the minimum down payment for a house?
Depends on the loan you’re using to finance the house
- Conventional loan minimum down payment: 3%
- FHA loan minimum down payment: 3.5%
- VA loan minimum down payment: 0%
- USDA loan minimum down payment: 0%
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