What First-Time Home Buyers Need To Know About Down Payments
So, you’re about to purchase a home for the first time. You’ve heard that purchasing a home is a great investment in your future and for your portfolio. Also, it’s great to have a place that you can truly call your own.
However, you don’t know how much you need to put down for a down payment. While 20 percent is the general rule of thumb, most people don’t put this much down on a home. In fact, a recent LA Times article stated that the 20 percent down payment is dead, especially for first time home buyers, not only because several banks and lending programs require less but also because of less than stellar credit history.
Here are some general guidelines to how much you should put down when purchasing a home and how to save money doing it.
How Much Do I Need To Save For A Down Payment?
Generally, you’ll want to save anywhere from 3-20 percent for your down payment in order to qualify for a conventional 30-year loan. If you’re looking to qualify for a jumbo loan, which is a loan that is higher than the conforming loan limits set by the Federal Housing Finance Agency, then you’ll need at least a 10 percent down payment.
Even though you can put less than 20 percent as a down payment on conventional loans, you’ll need to pay private mortgage insurance until you pay off 20 percent of the loan. You’ll need to calculate this fee into your mortgage payments when evaluating your budget.