Many people assume that in order to buy a home, it is necessary to make a 20 percent down payment, which can sometimes make it very difficult for some home buyers to save for. Even though making a 20 percent down payment can save you a significant amount of money over time, you can still qualify for a mortgage and buy a home for a lower down payment amount. If you are ready to buy a home in Knoxville, Maryville, Lenoir City, Oak Ridge, or Gatlinburg, Tennessee, and want to better understand the related costs, Foundation Mortgage is here to help. Read on to learn more about how much money is needed when making a down payment on a property.
Spending a Suitable Amount On a Home Down Payment
It will be your decision to decide on the amount of down payment that you are able to afford, and the required minimum down payment amounts will vary with each lender. Some lenders may require a 20 percent down payment for certain types of loans, but there are other options that allow potential home buyers to qualify for a mortgage with a lower down payment by paying mortgage insurance, (which protects a lender if a borrower defaults on a loan). Some available programs intended to help borrowers purchase a home with a down payment lower than 20 percent include:
- FHA loans – Insured by the government, these loans have down payment options as low as 3 percent and allow borrowers with lower credit to qualify for a mortgage.
- Conventional loans – Loans that are not backed by the government and that offer down payment options for as low as 3.5 percent with great terms and rates.
- VA loans – intended for military veterans and current service members, these loans do not require a down payment and are backed by the government.
Affording The Down Payment On A Property
The kind of loan you qualify for and the total amount of your down payment will depend on what kind of property you want to buy, as well as your current financial situation. When you are preparing to purchase a home and saving up for a down payment, you will want to ensure that you budget carefully, beginning by decreasing the amount of debt owed on credit cards, car payments, etc. and cutting down on unnecessary spending. In addition to paying for a down payment and monthly mortgage payments, you will want to factor in expenses for closing costs, property taxes, etc. Therefore, it is advisable to not spend your entire savings on the down payment.
If you are buying a home in Knoxville, Maryville, Lenoir City, Oak Ridge, or Gatlinburg, Tennessee, contact Foundation Mortgage today for assistance with your financing questions.