Are you ready to purchase a home? Buying a home is just as exciting as it is stressful. And if you’re new to the housing market you probably have a lot of questions. One common question that we get is regarding down payments. How much do you need to have saved to purchase a home? Well, this depends on the lender and the loans they offer.
Conventional wisdom tells us that home buyers will need to put 20% down to purchase a home. But this isn’t always the case; in fact, there are some lenders that have loans with a lot less down payment, and, if you are a veteran you likely qualify for a VA loan, which doesn’t require you to put anything down when purchasing a home.
The most common mortgage options are a conventional mortgage and an FHA mortgage. We’ll share some differences between the two and explain how it affects your down payment but the most reliable source of information on the loan type that will be best for you is a mortgage professional in your local area. If you’re looking for a recommendation in the South Metro Denver area, we have several that you can contact and would be happy to point you in the right direction. You can email us here!
A Conventional Mortgage
Traditional lenders (like mortgage companies, credit unions, and banks) finance conventional mortgages. Most of these lenders prefer borrowers with 20% down payments, but some offer as low as 3% down if you meet certain income limits. Lenders will look at your credit, income, and other factors when determining your loan options. One additional thing to consider is private mortgage insurance (PMI). You will likely be required to purchase PMI if you use a traditional lender. But if you qualify for 3 or 5% down this may not be the case. Your Mortgage Broker will be able to help determine what loan best fits you.
An FHA Mortgage
Federal Housing Administration (FHA) loans are another common mortgage option with more lenient qualifications. These types of mortgages can offer you as little as 3.5% down if you qualify. In order to qualify for an FHA loan, buyers with lower credit scores will need to meet other requirements.
We always recommend that our clients communicate with a Mortgage Professional prior to looking for a home to completely understand how much home they can purchase. It can be extremely disappointing (and time-consuming) to find your dream home only to find out that you’ve been looking at homes in the wrong price range.
A good local Realtor will undoubtedly be able to recommend a number of excellent mortgage brokers or lenders who will work with you to determine how much house you can actually afford.
How Can We Help?
Our goal is to keep everyone informed on what’s happening in our community as well as the real estate market. We sincerely hope that you have found this information on how much you need to have saved to purchase a home valuable. And if you need any help buying or selling, please reach out. Let us help you find your dream home, or put your home on the market!
If you would like more information on how the South Metro Denver Luxury Real Estate Market is doing, you can sign up for our monthly market report here.
We as a team are committed to supporting each other and our clients. If there’s anything you need at all, please get in touch!
Jeff Kloenne & Ryan Wilson & Vicki Zeeb
Certified Luxury Home Marketing Specialists
Coldwell Banker Residential Brokerage
Ryan (303) 916-8491
Jeff (303) 884-9830
Vicki (303) 549-6203