How much of a down payment do you need to buy a home?

You want to buy a home, but you don’t have a 20 percent down payment saved. The good news is that in many cases, home buyers don’t need that much money to buy a home. But you’re going to have to set aside some money. How much? And how can you save the amount you need?

You’ll want to start by meeting with us to see how much house you can afford, how much of a down payment you’ll need and which types of home buying programs you may qualify for. The good news is that mortgage rates are at record lows, which increase your buying power. And, while many conventional home loans require as much as a 20 percent down payment, there are numerous other financing options available for those with more limited savings. If you are a veteran or member of the military, for example, you could qualify for a VA loan. There’s also the popular Federal Housing Administration and USDA loan programs. The required down payment with these programs is typically 3-5%, and in some cases, there’s no down payment requirement! (Closing costs and fees may still apply.) By meeting with us and having us review your financial picture, you’ll get an idea of how much you’ll need to save for your down payment and/or closing costs/fees based on your individual circumstances, credit score and existing debt load.

Once you have an idea of how much house you can afford and how much money you’ll need to save for a down payment, you’ll want a plan. Suppose you qualify for a $200,000 home and need to save $6,000 for the down payment and closing costs. A plan will help you reach your goal. Many people find it useful to calculate a monthly savings goal.

While you’re saving for a down payment, you’ll want to review your spending habits. Do you need to pay for a premium cable package? The deluxe cell phone plan? Daily trips to Starbucks? Cutting down or cutting out small and large budget items can help you free up more cash.

Avoid large purchases on credit and keep trying to pay down debt. Try not to be discouraged if you face a financial setback, such as an unexpected car repair, while you’re saving for a home. Enlist friends and family to provide encouragement and keep you motivated. You may be surprised at how quickly you’re able to build your savings!

At Primary Residential Mortgage, we work hard to make the dream of homeownership come alive. We offer a number of different home loan options. Let us help you explore them! Give us a call to get started: (360) 903-7890.