A lot of people say that buying a home is one of the biggest decisions in their lives. I would happen to agree. I love being able to find people exactly what they’re looking for and seeing them happy and settled.
However, looking for a home isn’t all butterflies and flowers. There’s a lot that goes into the decision, and a down payment is something buyers should think about before they’re ready to pounce.
How much should your down payment be though? Is there such thing as a good down payment? I’ll go over questions and answers regarding down payments and how much money you should look to put down.
First of all, what is a down payment? A down payment is a percentage of your home’s overall cost that you’re putting down to reduce your payments over the life of your home loan. You can also look at the down payment as your initial investment into the home.
How much is a good amount to put down? According to Bank of America, a good amount to put down for a down payment depends on a couple things:
- The purchase price of the home
- Your loan program. Different loan programs require different percentages ranging from 5% to 20% down payment.
There is also an easier way to calculate the down payment of your home. You can use this easy to use mortgage calculator. With it, you can specify the amount of your home, the area your home is in as well as the status of your credit. It will also then show you what percentage down you placed for the loan and the timeline for the loan such as 15 year or 30 year.
For many people, saving a down payment can be a big obstacle. But, there’s good news! According to this article from Zillow.com, there are thousands of programs that can help with down payment assistance. For these programs there are qualifications and exclusions, so make sure you ask your realtor what they are and if you qualify.