Determine your down payment - Consumer Financial ...

In addition to your down payment, there are many costs associated with ... You can often save money if you put down at least 10 percent of the home price, ... Skiptomaincontent Buyingahouse 1.PreparingtoShop Inthissection Show Hide 1.PreparingtoShop CheckYourCredit AssessYourSpending BudgetforNewExpenses DetermineYourDownPayment DecideHowMuchYouWanttoSpend ConsiderWhetherIt'stheRightTimetoBuy BuildaNetworkofAdvisors CreateaLoanApplicationPacket 2.ExploringLoanChoices 3.ComparingLoanOffers 4.ClosingonYourNewHome Preparingtoshop Determineyourdownpayment Nowthatyouhaveagoodsenseofwhatyoucancomfortablyaffordonamonthlybasis,it’stimetolookatyoursavingsanddeterminehowmuchyoucanaffordforadownpayment. YourdownpaymentdecisionWatchourshortvideotolearnwhattoconsiderwhenchoosinghowmuchtoputdownWatchvideo WhattodonowDeterminehowmuchmoneyyouareabletospendupfrontonyourhomepurchaseGatheryoursavingsandinvestmentstatementsandaddupyourtotalavailablefunds.Decidehowmuchyouwanttosetasideforothersavingsgoals,movingcosts,andanyrenovationsforyournewhome.Subtracttheseamounts.Now,subtractanadditionalamountforanemergencycushion.Agoodruleofthumbisatleastthreetosixmonths'worthofexpenses.Theresultisyourmaximumavailablecashforclosing–howmuchyoucancontributeoutofpocketatthetimeyoucloseonyourloan.Estimateyourcoststo"close"Inadditiontoyourdownpayment,therearemanycostsassociatedwith"closing"orfinalizingyourloanandhomepurchase.Closingcostsdependonalotofthings–thepriceofthehomeyoubuy,yourdownpaymentamount,thelendercosts,thekindofloanyouchoose,andthelocationofyournewhome.Sinceyou’restillearlyintheprocess,it’shardtomakeapreciseestimateatthisstage.Youcanmakearoughestimatenow,usingahomepricethatistypicalfortheneighborhoodsyou’dliketolivein.Comebackandrefineyourestimateasyoumoveforwardandgathermoreinformation.Typically,closingcosts(notincludingyourdownpayment)rangefrom2-5%ofthehomepurchaseprice.DetermineyourdownpaymentSubtractyourclosingcostsestimatefromyouravailablecashforclosingtodetermineyourmaximumdownpayment.WhattoknowSetasidesomemoneytocoverinitialhomeexpenseNewhomeownersoftenfindthingsthatneedfixing,ordiscoverthattheyneedanadditionalpieceoffurnituretomakethenewhomeworkfortheirfamily.Movingexpensesandutilityset-upfeescanalsoaddup.Whenthinkingabouthowmuchyoucanaffordforadownpayment,makesuretosetasidesomemoneytocovertheseexpenses.Yourdownpaymentamountaffectsthe typeofloan youcanget,yourinterestrate,andyourloancostsIngeneral,thehigheryourdownpayment,thelessyourloanislikelytocost.Inmostcases,youneedadownpaymentofatleast3percentofyourtargethomeprice.Manyloantypesandlendersrequire5percentdownormore.Youcanoftensavemoneyifyouputdownatleast10percentofthehomeprice,andyou’llsavethemostifyouputdownatleast20percent.Whenlendersdecidetheinterestrateandloancoststoofferyou,theytypicallylookatyourdownpaymentinincrementsof5percent.Thereareusuallynosavingsforputtingdown“almost”therequiredamount.Forexample,ifyouhaveenoughsavedforadownpaymentof,say,8percentofyourtargethomeprice,thinkaboutwhetheryoucouldsaveupalittlemorebeforebuying,orchooseaslightlycheaperhome,soyoucanhitthe10percentmark.Ifyou’reunsureaboutwhattodo,considertalkingtoaHUD-certifiedhousingcounselor.Low-orno-downpaymentoptionsmaybeavailabletoyouTherearespecialprogramsforveteransandservicemembers,ruralresidents,sometypesoffirst-timehomebuyers,andothers.A housingcounselor maybefamiliarwithlocalprogramsinyourarea.Individuallendersmayalsooffertheirownlow-orno-downpaymentoptions.Low-downpaymentoptionsusuallycomeatincreasedcost.Whenyoumeetwithlenders,askquestionsandasktoseemultiplechoices.Puttingmoneyintoyourhomemeansit’snotavailableforotherthingsWhendecidinghowmuchmoneytoputdown,keepinmindthatonceyouputmoneyintoyourhome,it’snoteasytogetitbackoutagain.Ifyouneedthemoneyforanothermajorexpense,likepayingforcollegeormedicalexpenses,youmayfindthatthereisnowayforyoutoaccessthismoney.Whilehomeequityloansorlinesofcreditallowhomeownerstoborrowagainsttheirequity,youusuallyneedtohaveownedyourhomeforseveralyearsandbuiltupsignificantequityinordertoqualify.Borrowingagainstyourequityalsoisn’tfree–youpayinterestontheloan. Signupforour2-weekGetHomebuyerReadybootcamp.We’lltakeyoustep-by-stepthroughtheentirehomebuyingprocess. Emailaddress Signup SeePrivacyActstatement HowtoavoidpitfallsGiveyourselfacushionAtthisstage,noneofthenumbersyouareworkingwithareprecise.It’sagoodideatogiveyourselfacushioninyourestimates,sothatifyourcoststurnouttobehigherthanexpected,you’renotleftscramblingformoney.Don’tforgetyourothersavingsgoalsWhenconsideringhowmuchsavingsyouhaveavailableforyourdownpayment,don’tforgetyourretirementandothersavingsgoals. Wasthispagehelpfultoyou? Yes No Additionalcomment (optional) Pleasedonotshareanypersonallyidentifiableinformation(PII),including,butnotlimitedto:yourname,address,phonenumber,emailaddress,SocialSecuritynumber,accountinformation,oranyotherinformationofasensitivenature. Submit Visitoursourcespagetolearnmoreaboutthefactsandnumberswereference.Theprocessandformsdescribedonthispagereflectmortgageregulationsthatapplytomostmortgages.