Down payments and what to expect when buying a home

Down payments and what to expect when buying a home

So you are starting the process of searching for a home and your first question is... How much money am I going to need? Well you have a few options and a few things you will need to understand. The easiest loan to qualify for currently is the government backed FHA loan. The minimum down payment on this type of loan is 3.5% so lets use $200,000 as our example price. You will need 3.5% of $200,000 which equals $7500, you will also need to set aside some extra money for closing costs(lender fees, title costs, appraisal etc...). These extras can add up so put aside another 1.5% of the loan amount to be on the safe side. So in total for an FHA loan you will want to have about 5% of the loan amount prepared as a down payment. 

You can qualify for conventional loans with anywhere from 5-20% down. These loans will include what they PMI (primary mortgage insurance) this will make your payment slightly higher but protects the lender in case of default. Conventional loans have tighter credit standards then an FHA loan but will offer you a lower rate and costs. 

For our veterans you can qualify for VA loan benefits. These loans allow you to purchase your primary residence with no money down. There are certain factors to qualify so check with the V.A. to be sure. 

If you are prepared to begin your home search or you need some more info on financing or loan products. Please don't hesitate to give us a call at 941-726-8750 or email at mattbohanon@kw.com