Everything You Need to Know About Down Payments

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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