What is a down payment?
A down payment on a house is a portion of your home purchase price that you pay up front. If you take out a mortgage loan, you’ll typically pay your down payment on closing day with the remaining cost of the home paid in monthly installments.
How much is a down payment for a house?
The down payment for a house will vary depending on factors such as your home’s appraisal price, the type of mortgage loan and your credit history. You may have heard the myth that if you want to own a home, you have to put down a minimum of 20%.The truth is, there is no standard down payment amount. The average down payment is less than 6%, reports HousingWire.1
When determining how much you should put down, use the Guild Mortgage payment calculator to understand all costs in your monthly payment. Then choose the amount based on your financial situation.
Example of a down payment on a house
If you’re in the market to buy a home that is appraised for $300,000, and you’ve saved $30,000 for a down payment, your down payment will be 10%.
Minimum down payment requirements for a house
While lenders set the minimum down payment requirements, you can always pay more. A bigger down payment helps lower your borrowing costs and monthly payments. However, a substantial down payment can have its disadvantages. Not only can it take years to save 20% down, but it can also leave you without cash on hand for inevitable repairs or other investments.
Can I buy a house with no down payment?
If you can afford monthly mortgage payments and other living expenses, these low or no down payment mortgage programs make homebuying more affordable and offer a variety of advantages:
Department of Veterans Affairs (VA) loans are created for eligible military veterans, service members and their spouses. They offer attractive interest rates and the ability to borrow up to 100% of the home’s value.
United States Department of Agriculture (USDA) loans are offered to rural property owners with a low-to-moderate income for their area. Zero down payment options are a benefit of USDA financing programs.
FHA, FNMA HomeReady and FHLMC Home Possible Mortgages loans are a lending option designed for low-to-moderate income borrowers with less-than-perfect credit and limited cash for a down payment. They also offer very flexible sources of down payments, including gifts and down payment assistance programs.
How to get help with your down payment
Down payment assistance (DPA) programs open the door to affordable homeownership for those who qualify. Eligibility is most commonly based on income, with assistance provided in the form of a loan or grant that is sometimes forgiven over time.
Did you know that down payments don’t have to come from your personal funds? Another form of help can come as gifted funds from family.
Since we started helping people get into homes in 1960, Guild has been offering affordable lending programs. Our expert loan officers are ready to help you become a homeowner.
The above information is for educational purposes only. All information, loan programs and interest rates are subject to change without notice. All loans subject to underwriter approval. Terms and conditions apply.
1The average down payment is much smaller than you think – HousingWire