Are you interested in purchasing a home, but are unsure how much you are able to pay for a down payment and wondering how much money you will be required to put down? When it comes to buying your own home, this is one of the most common concerns amongst potential homebuyers. If you are interested in purchasing a home in Knoxville, Maryville, Lenoir City, Oak Ridge, or Gatlinburg, Tennessee, and want to learn more about how much you should pay for a down payment, contact the loan specialists at Foundation Mortgage. We can help you determine the best down payment and home financing options for your unique situation.
Home Down Payments: Essential Information
A down payment is the amount of money you pay upfront when you close on your home loan. The down payment you make represents your investment in the property, and the lender will then provide the rest of the money so that you can buy the home. The amount you pay for the down payment will affect your interest rates, subsequent monthly mortgage payment amounts, and will determine if you need to pay private mortgage insurance or not. Most mortgages will require a down payment, but in certain cases, a down payment may not be required, (for instance no down payments are required on VA and USDA loans).
How Much Do I Need for a Down Payment?
The amount you will pay for your down payment will depend on the type of loan you choose and the price of the home you are interested in. There are several advantages to paying a 20% down payment, because you will have better interest rates, lower monthly mortgage payments, and you will not be required to pay private mortgage insurance. However, if a borrower is not able to make a 20% down payment, there are still opportunities to purchase a home with a lower down payment. The down payment you pay will depend on the lender’s requirements and your credit score. Here are some common loan types that require less than a 20% down payment:
- Certain conventional loans – You may be able to qualify for a traditional home loan with a down payment as low as 3%
- FHA loans – these loans offer a down payment of 3.5% and have more lenient qualifying credit requirements
- VA and FHA loans – For qualified borrowers, a down payment is not required for these loan types
Understanding Your Down Payment on a Home
There are several factors that will determine how much you will need to pay for the down payment of your home. If you want to learn more about what you will be expected to pay for a down payment in Knoxville, Maryville, Lenoir City, Oak Ridge, or Gatlinburg, Tennessee, contact Foundation Mortgage today for a consultation.
