How much should you spend on a down payment on a house?

by Tina Broyles, DRE 01009212 & NMLS 91630 12/17/2023

A major step in the homebuying process is paying the down payment on a house. Deciding how much to put down can be tricky, however, and affects both your mortgage terms and buying experience in a number of ways.

To help you make the best decision, here are some key facts about down payments buyers should know:

Minimum down payment on a house

The required minimum down payment to buy a house depends upon the type of loan you apply for. Conventional loans, while not backed by the government, follow the same regulations as government loans and typically require a minimum of 3% down payment.

FHA loans offered by the Federal housing administration require as little as 3.5% with a solid credit score.

Loans guaranteed by the U.S. Department of Veterans Affairs generally don't require a down payment at all. However, these loans have specific eligibility requirements and can have higher interest rates.

How your down payment affects your offers

When market conditions are competitive, sellers will receive multiple offers for the same property. A larger down payment can give you a competitive edge.

However, it's important to remember closing costs when budgeting for your home purchase. Be careful of opting for a down payment that will leave you unable to afford the other expenses associated with homebuying.

The ‘right' down payment amount is different for everyone

The amount of down payment to offer is different for every situation. With a lower down payment, you may be required to pay private mortgage insurance, increasing your long-term costs. Lower down payments can also mean larger interest rates, which can add up considerably down the road.

Down payment assistance programs are available for first time buyers who need extra help to afford cash up front. Keep this and other options in mind when planning for your home purchase to ensure the best possible financial outcome.

About the Author
Author

Tina Broyles, DRE 01009212 & NMLS 91630

 

Headline: Tina Broyles: Your Expert Real Estate Agent for Fremont, San Jose, and the Bay Area | eXp Realty

Bio:

As a dedicated real estate professional and a long-time resident of the California Bay Area, I have been proudly serving the real estate community since 1987. My mission is to provide my clients with unparalleled professionalism, in-depth market knowledge, and a caring approach that has resulted in a business built almost entirely on referrals.

Your Trusted Real Estate Advisor in the Bay Area

I specialize in the vibrant and diverse real estate markets of Fremont, Campbell, San Jose, Saratoga, Cupertino, Sunnyvale, Morgan Hill, Santa Clara, Mountain View, and Milpitas, CA. With over three decades of experience, I have a deep understanding of these communities and can provide you with the insights you need to make informed decisions.

One of the most consistent compliments I receive from clients is about my responsiveness to their needs. Your goals are my top priority, and I am committed to being there for you every step of the way. I am honored to have been voted "Best of Milpitas" every year from 2000 to 2020, a testament to my dedication to my clients and my community.

About My Business: eXp Realty

As part of the innovative eXp Realty team, I bring a diverse set of skills and a commitment to excellence to every transaction. We leverage cutting-edge technology that is "beyond expectation" to provide you with a seamless and efficient real estate experience. My team and I offer the perfect balance of experience and professionalism to help you achieve your real estate dreams in the Bay Area.

Community Involvement

I believe in giving back to the community that has given me so much. I am a happily married mother of two and a proud grandmother to two beautiful granddaughters, Audrina and Chesney. In my free time, I enjoy golfing, exercising, and my weekly Bible study. I am also passionate about serving the homeless community in Milpitas and supporting our local businesses.

I would be honored to get to know you and your family and put my extensive real estate experience to work for you.

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