What is the minimum down payment for a house?

If you’ve been dreaming of becoming a homeowner, one big concern may be weighing on you: coming up with the minimum down payment for a mortgage.

The median existing-home price was $352,800 in September 2021, according to data from the National Association of Realtors, and that number seems poised to jump even higher due to a hot housing market and low inventory in many parts of the country. However, you don’t have to let the asking price scare you away from looking at mortgage rates. Depending on the type of mortgage you choose and your willingness to pay for mortgage insurance, you may be able to buy a home with a small upfront down payment.

Let’s take a look at how much you really need in order to stop renting and start building equity in a home.

What is the minimum down payment for a house?

A down payment is the amount of money you contribute towards the purchase of a home. Think of it as the amount you initially put up as your share of ownership. The higher your down payment, the less you’re asking to borrow — and the lower your monthly payments will be.

Lenders require a down payment for most types of home loans, but there are exceptions for certain types of buyers. Here are the basic down payment requirements for various types of mortgages:

Loan type	Minimum down payment
Conventional loan	3%-15% depending on lender and loan
Jumbo loan	20% or more depending on lender
FHA loan	3.5%
VA loan	None required
USDA loan	None required

Conventional loans follow guidelines set by Fannie Mae and Freddie Mac, but lenders can have their own requirements above those standards, as well. There are conventional loan options that require a down payment of as little as 3 percent, but many lenders impose a 5 percent minimum. If the loan is for a vacation home or a multifamily property, you could be required to put down more, generally 10 percent and 15 percent, respectively.

Jumbo loans, which exceed the loan limits set by Fannie Mae and Freddie Mac, tend to require a higher down payment than other kinds of mortgages. These are larger sums, hence the “jumbo” name. The minimum is usually determined by the individual lender, but it can be 20 percent, 25 percent, 30 percent or more.

FHA loans, backed by the Federal Housing Administration, are available for as little as 3.5 percent down if the borrower has a credit score of at least 580. If the borrower has a lower score (500-579), the minimum down payment is 10 percent. FHA loans have other costs, though, including an upfront mortgage insurance premium and mortgage insurance throughout the life of the loan. One option to note: If you have a low credit score today, you can consider taking out an FHA loan and refinancing into a conventional loan when your credit improves down the road.

VA loans, which are available to active-duty military, veterans and eligible surviving spouses don’t require a down payment. USDA loans also don’t require a down payment, but the borrower needs to be buying in a designated rural location to qualify. There are other fees to consider with these government-backed loans, including a VA funding fee and an upfront fee of 1 percent of the loan amount with USDA-backed mortgages.

Average down payment for a house

Now that you have an understanding of the minimum amount for a down payment, you might be thinking about another question: How much is the average down payment for a house? The most recent data from the National Association of Realtors shows that the average homebuyer makes a down payment of 12 percent. However, to get a closer look at typical down payments, consider what different types of buyers can afford.

First-time homebuyers: 75 percent of first-time homebuyers do not put down 20 percent. In fact, the average first-time homebuyer puts down just 6 percent of the purchase price.

Current homeowners: For those who aren’t new to buying a home, the average down payment is higher: 16 percent of the purchase price.

Cash buyers: Some new homeowners with deep pockets don’t bother putting down a fraction of the purchase price. Instead, they pay for the entire property with an all-cash offer. In September 2021, the National Association of Realtors reported that 23 percent of all home purchases were cash sales.

Debunking the 20 percent down payment myth

You may have heard that 20 percent is the required minimum, but that’s not the case. Twenty percent is simply how much you need in order to avoid having to pay extra for mortgage insurance. The insurance is to protect the lender — since you’re borrowing more money with less down, you pose a bigger risk.

The reality is that as home prices continue to rise, many homebuyers can’t afford to put down 20 percent. In fact, 49 percent of all buyers put down less than 20 percent, according to the most recent data from the National Association of Realtors.

If so many are buying homes with smaller down payments, where did the 20 percent down payment myth come from? It’s most likely based on Fannie Mae and Freddie Mac guidelines. To qualify for a guarantee from either of these entities, a borrower needs to either put 20 percent down or pay mortgage insurance.

Is it worth putting down 20 percent?

So, you don’t have to put down 20 percent, but should you? That answer depends on a number of factors, but the most important is your own bank account. If you are sitting on plenty of cash and putting down 20 percent won’t stress your finances, it’s a good move to avoid costly mortgage insurance payments. However, if a 20 percent down payment will drain most of your bank account, you’ll want to think twice. Homeownership comes with loads of other expenses, and you need to be prepared for potential emergencies, too. If that means paying mortgage insurance for a while, that’s okay.

Consider some of the pros and cons about hitting the 20 percent threshold:

Down payment less than 20 percent

Pros

Stop renting sooner
Start building home equity now
Maintain more cash in your reserves
No mortgage insurance requirement
Lower borrowing amount means lower interest total over the life of the loan
Potential for lower monthly payments
Will qualify for better interest rates

Cons

Mortgage insurance payments
Potentially higher interest rates
Will not be able to buy a more expensive property
Larger loan balance means more interest over the life of the loan Cons
May drain a large chunk of your savings
May need more time to save enough to hit the magic 20 percent marker, which means delaying ownership

Down payment 20 percent or more

Pros

No mortgage insurance requirement
Lower borrowing amount means lower interest total over the life of the loan
Potential for lower monthly payments
Will qualify for better interest rates

Cons

May drain a large chunk of your savings
May need more time to save enough to hit the magic 20 percent marker, which means delaying ownership

What does a 20 percent down payment look like?

If you’re trying to determine what a 20 percent down payment will mean for your finances, the answer depends on where you’re looking to buy. Home values vary across the country, which means that saving up 20 percent of the purchase price in one city will be a lot easier (or harder) than in another area of the country. Consider the differences among these three markets, based on homes values in the middle of 2021:

Cedar Rapids, Iowa

Median home value: $188,400
20 percent down payment: $37,680

Phoenix, Arizona

Median home value: $408,700
20 percent down payment: $81,740

San Francisco, California

Median home value: $1,385,000

20 percent down payment: $277,000

How much should you put down on a house?

It’s important to understand how much the down payment for a house will impact your payments. Consider a $300,000 home and a 30-year fixed mortgage with a 3.2 percent interest rate with different down payments:

Home price	Down payment	Amount borrowed	Monthly mortgage payment (principal and interest)
$300,000	5% ($15,000)	$285,000	$1,232
$300,000	20% ($60,000)	$240,000	$1,037

The monthly mortgage payment above doesn’t include homeowners insurance, property taxes, and, for the 5 percent down payment scenario, mortgage insurance. That cost will vary, but consider an estimate from Freddie Mac that pegs monthly premiums for the above loan at $274. Making a 20 percent down payment means you won’t have to pay this added cost.

There’s another way to look at things, though. The premiums you have to pay on private mortgage insurance for a conventional loan are cancelled once you build 80 percent equity in the property. So, dealing with that extra cost temporarily can mean the difference between continuing to rent and buying your own place. Paying an extra fee is never fun, but it helps get you in a home of your own much faster.

Another important consideration: A higher down payment can get you a lower interest rate, further saving you money each month. We didn’t account for that in the example here, but it’s one more reason why a larger down payment can be beneficial.

As you think about how much to put down on your house, consider these key factors before settling on an amount:

Your emergency savings fund. If a crisis hits the week after you close on your home — say losing your job or receiving an expensive medical bill — will you have enough liquid savings to weather the storm? Additionally, you may have other emergencies related to the home. What if you buy it this fall and the furnace goes out this winter? Can you afford to repair it?
Your other monthly bills. What else are you paying for each month? Your car loan, phone service, groceries — none of these will disappear after you buy a home. Compare different down payments to get a sense of how it will impact your monthly mortgage bill and budget appropriately to make sure your income can continue to cover all of the essentials along with it. As a general rule, your monthly housing expenses should be 28 percent or less of your monthly income. For example, if you make $4,000 each month after taxes, you should aim to pay no more than $1,120 for your housing costs.
Your closing costs. In addition to a down payment, you’re going to need to cover closing costs, a range of fees associated with your mortgage that typically total 2 percent to 4 percent of your loan principal. Make sure that you have these funds set aside before determining your down payment.

You can use Bankrate’s down payment calculator to understand how different amounts will impact your bottom line. If you can afford a bigger down payment, remember not to stretch yourself too thin. You want to be able to enjoy living in that new house without depleting your entire savings and stressing about your finances.

How to save for a down payment

Regardless of what percentage you’re aiming to hit – 3 percent of the purchase price or 20 percent – you’ll need to put a plan in place to set aside that money. Here are some tips to focus on building up your down payment funds:

Start immediately. Even if you’re still comparing mortgage offers and determining how much you really need, earmark savings specifically for your new home as soon as possible.
Identify what to cut. Analyze your bank statements from the past few months to get a sense of where you can reduce spending and accelerate your savings. What can you cut? Can you eliminate some of your entertainment services?
Open a separate savings account. Keeping your down payment money with your other savings could tempt you to spend it elsewhere, so consider opening a separate account specifically for your home purchase. If you can, set up regular automatic deposits from your paycheck to your savings account so you’re more likely to stick to your savings plan.
Make a timeline. Once you know how much you need, look at how much you’ve already saved, and determine a timeline for when you want to achieve your savings goal. For example, if you want to save $20,000 in five years, you’ll need to save $4,000 per year, or $333 a month. You can also work the other way around and determine how much you can save each month by looking at your budget, and using that information as your timeline. Be sure to remember that home prices will be different in the future, too. They’ve been rising at a record pace recently. So, 10 percent of the median home price today may not hit that mark in three years.
Research assistance programs. You might be able to save less or buy a home sooner if you qualify for down payment assistance. The federal government and local and state governments, as well as nonprofit organizations, offer these types of programs to help make homeownership more affordable. They tend to be directed toward moderate- to low-income buyers who are purchasing their first home, but there are some options for repeat buyers, as well. Some even help public service workers, such as firefighters and teachers, buy a home in the communities they serve.

Down payment FAQs

Still searching for the right answers to decide how much to save for a down payment? These frequently asked questions can point you in the right direction.

How can I avoid PMI without putting 20 percent down?

No one wants to pay extra for mortgage insurance. If you’re putting down less than 20 percent on a conventional loan, there are a couple of options. The first is lender-paid mortgage insurance, which – as it sounds – puts the lender in charge of covering those mortgage insurance premiums. However, you will still pay in the form of a higher interest rate. You’ll need to calculate what’s better for your budget: paying the PMI yourself or finding an LPMI option.

The second option for avoiding PMI is an 80/10/10 loan, which is commonly called a piggyback loan. In this situation, you can put down 10 percent and take out two mortgages. One will cover 80 percent of the purchase price, and the other covers 10 percent. You’ll never see a line item for PMI, but you will be paying back two mortgages with two sets of interest charges. You’ll also pay two sets of closing costs to cover both loans.

What’s more important: Your down payment or mortgage payment?

You might be wondering what matters more – your upfront payment or your monthly financial obligation on a home. The reality is that they are both important, and one impacts the other. The more you can put down, the smaller your monthly payments will be. However, making a small down payment isn’t necessarily a bad move. While you’ll need to spend time saving up for that big down payment, that’s a one-time cost. Your mortgage payments are going to happen every month – perhaps for the next 30 years. So, do the math to make sure you can afford that recurring bill while paying other bills and saving for the future.

Can I use a gift for a down payment?

If you can’t come up with all the money for a down payment on your own, but you have a really great person in your life who wants to help you out, you’re in luck: You can accept a financial present from someone else. However, who can give that money to you depends on the type of loan. For conventional loans, it will need to be a family member. For FHA loans, there is a bit more flexibility to use gift funds from friends, labor unions and even employers. Regardless of your loan, getting a gift isn’t as simple as cashing a check. Be sure to read the rules for using gift funds for your down payment before receiving any money.

Can a lender or seller contribute to the down payment?

One party that cannot be part of a “gift” for a down payment is the seller. They qualify as a person with a vested interest in selling the house, which excludes them from being able to write you a check. They can, however, make concessions or offer credits (typically limited to a fraction of the sales price) at closing in designated amounts to cover specific items such as repairs on the property.

Lenders can play a role in helping certain borrowers – often those who qualify as low- to moderate-income – get to the finish line via down payment grant programs and lender credits that help offset closing costs. Not every lender offers down payment assistance options, so you’ll want to ask about availability as you compare loan programs.

How does down payment affect LTV?

You’ll see a lot of acronyms when you’re trying to buy a house, and one of the most important is LTV, which stands for loan-to-value ratio. Your down payment sets your initial LTV. For example, let’s say you’re planning to put $20,000 down on a house that has an appraised value of $200,000. In this case, your LTV would be 90 percent. You’re borrowing $180,000 – 90 percent of the home’s total value. As you make monthly payments and build equity, your loan-to-value ratio will change. Once your LTV hits 80 percent, it means you have 20 percent equity and the ability to cancel private mortgage insurance on a conventional loan.

Bottom line

Don’t let the 20 percent down payment myth prevent you from becoming a homeowner. Although some loans may charge higher interest rates if you put down less than 20 percent, and you may need to pay mortgage insurance, that extra cost can be worth it to get you on your way to building equity in your own home.

Written by David McMillin

6 March, 2022/by Carlos

Actualidad, BUSINESS, Informes

What is the minimum down payment for a house?

If you’ve been dreaming of becoming a homeowner, one big concern may be weighing on you: coming up with the minimum down payment for a mortgage.

The median existing-home price was $352,800 in September 2021, according to data from the National Association of Realtors, and that number seems poised to jump even higher due to a hot housing market and low inventory in many parts of the country. However, you don’t have to let the asking price scare you away from looking at mortgage rates. Depending on the type of mortgage you choose and your willingness to pay for mortgage insurance, you may be able to buy a home with a small upfront down payment.

Let’s take a look at how much you really need in order to stop renting and start building equity in a home.

What is the minimum down payment for a house?

A down payment is the amount of money you contribute towards the purchase of a home. Think of it as the amount you initially put up as your share of ownership. The higher your down payment, the less you’re asking to borrow — and the lower your monthly payments will be.

Lenders require a down payment for most types of home loans, but there are exceptions for certain types of buyers. Here are the basic down payment requirements for various types of mortgages:

Loan type	Minimum down payment
Conventional loan	3%-15% depending on lender and loan
Jumbo loan	20% or more depending on lender
FHA loan	3.5%
VA loan	None required
USDA loan	None required

Conventional loans follow guidelines set by Fannie Mae and Freddie Mac, but lenders can have their own requirements above those standards, as well. There are conventional loan options that require a down payment of as little as 3 percent, but many lenders impose a 5 percent minimum. If the loan is for a vacation home or a multifamily property, you could be required to put down more, generally 10 percent and 15 percent, respectively.

Jumbo loans, which exceed the loan limits set by Fannie Mae and Freddie Mac, tend to require a higher down payment than other kinds of mortgages. These are larger sums, hence the “jumbo” name. The minimum is usually determined by the individual lender, but it can be 20 percent, 25 percent, 30 percent or more.

FHA loans, backed by the Federal Housing Administration, are available for as little as 3.5 percent down if the borrower has a credit score of at least 580. If the borrower has a lower score (500-579), the minimum down payment is 10 percent. FHA loans have other costs, though, including an upfront mortgage insurance premium and mortgage insurance throughout the life of the loan. One option to note: If you have a low credit score today, you can consider taking out an FHA loan and refinancing into a conventional loan when your credit improves down the road.

VA loans, which are available to active-duty military, veterans and eligible surviving spouses don’t require a down payment. USDA loans also don’t require a down payment, but the borrower needs to be buying in a designated rural location to qualify. There are other fees to consider with these government-backed loans, including a VA funding fee and an upfront fee of 1 percent of the loan amount with USDA-backed mortgages.

Average down payment for a house

Now that you have an understanding of the minimum amount for a down payment, you might be thinking about another question: How much is the average down payment for a house? The most recent data from the National Association of Realtors shows that the average homebuyer makes a down payment of 12 percent. However, to get a closer look at typical down payments, consider what different types of buyers can afford.

First-time homebuyers: 75 percent of first-time homebuyers do not put down 20 percent. In fact, the average first-time homebuyer puts down just 6 percent of the purchase price.

Current homeowners: For those who aren’t new to buying a home, the average down payment is higher: 16 percent of the purchase price.

Cash buyers: Some new homeowners with deep pockets don’t bother putting down a fraction of the purchase price. Instead, they pay for the entire property with an all-cash offer. In September 2021, the National Association of Realtors reported that 23 percent of all home purchases were cash sales.

Debunking the 20 percent down payment myth

You may have heard that 20 percent is the required minimum, but that’s not the case. Twenty percent is simply how much you need in order to avoid having to pay extra for mortgage insurance. The insurance is to protect the lender — since you’re borrowing more money with less down, you pose a bigger risk.

The reality is that as home prices continue to rise, many homebuyers can’t afford to put down 20 percent. In fact, 49 percent of all buyers put down less than 20 percent, according to the most recent data from the National Association of Realtors.

If so many are buying homes with smaller down payments, where did the 20 percent down payment myth come from? It’s most likely based on Fannie Mae and Freddie Mac guidelines. To qualify for a guarantee from either of these entities, a borrower needs to either put 20 percent down or pay mortgage insurance.

Is it worth putting down 20 percent?

So, you don’t have to put down 20 percent, but should you? That answer depends on a number of factors, but the most important is your own bank account. If you are sitting on plenty of cash and putting down 20 percent won’t stress your finances, it’s a good move to avoid costly mortgage insurance payments. However, if a 20 percent down payment will drain most of your bank account, you’ll want to think twice. Homeownership comes with loads of other expenses, and you need to be prepared for potential emergencies, too. If that means paying mortgage insurance for a while, that’s okay.

Consider some of the pros and cons about hitting the 20 percent threshold:

Down payment less than 20 percent

Pros

Stop renting sooner
Start building home equity now
Maintain more cash in your reserves
No mortgage insurance requirement
Lower borrowing amount means lower interest total over the life of the loan
Potential for lower monthly payments
Will qualify for better interest rates

Cons

Mortgage insurance payments
Potentially higher interest rates
Will not be able to buy a more expensive property
Larger loan balance means more interest over the life of the loan Cons
May drain a large chunk of your savings
May need more time to save enough to hit the magic 20 percent marker, which means delaying ownership

Down payment 20 percent or more

Pros

No mortgage insurance requirement
Lower borrowing amount means lower interest total over the life of the loan
Potential for lower monthly payments
Will qualify for better interest rates

Cons

May drain a large chunk of your savings
May need more time to save enough to hit the magic 20 percent marker, which means delaying ownership

What does a 20 percent down payment look like?

If you’re trying to determine what a 20 percent down payment will mean for your finances, the answer depends on where you’re looking to buy. Home values vary across the country, which means that saving up 20 percent of the purchase price in one city will be a lot easier (or harder) than in another area of the country. Consider the differences among these three markets, based on homes values in the middle of 2021:

Cedar Rapids, Iowa

Median home value: $188,400
20 percent down payment: $37,680

Phoenix, Arizona

Median home value: $408,700
20 percent down payment: $81,740

San Francisco, California

Median home value: $1,385,000

20 percent down payment: $277,000

How much should you put down on a house?

It’s important to understand how much the down payment for a house will impact your payments. Consider a $300,000 home and a 30-year fixed mortgage with a 3.2 percent interest rate with different down payments:

Home price	Down payment	Amount borrowed	Monthly mortgage payment (principal and interest)
$300,000	5% ($15,000)	$285,000	$1,232
$300,000	20% ($60,000)	$240,000	$1,037

The monthly mortgage payment above doesn’t include homeowners insurance, property taxes, and, for the 5 percent down payment scenario, mortgage insurance. That cost will vary, but consider an estimate from Freddie Mac that pegs monthly premiums for the above loan at $274. Making a 20 percent down payment means you won’t have to pay this added cost.

There’s another way to look at things, though. The premiums you have to pay on private mortgage insurance for a conventional loan are cancelled once you build 80 percent equity in the property. So, dealing with that extra cost temporarily can mean the difference between continuing to rent and buying your own place. Paying an extra fee is never fun, but it helps get you in a home of your own much faster.

Another important consideration: A higher down payment can get you a lower interest rate, further saving you money each month. We didn’t account for that in the example here, but it’s one more reason why a larger down payment can be beneficial.

As you think about how much to put down on your house, consider these key factors before settling on an amount:

Your emergency savings fund. If a crisis hits the week after you close on your home — say losing your job or receiving an expensive medical bill — will you have enough liquid savings to weather the storm? Additionally, you may have other emergencies related to the home. What if you buy it this fall and the furnace goes out this winter? Can you afford to repair it?
Your other monthly bills. What else are you paying for each month? Your car loan, phone service, groceries — none of these will disappear after you buy a home. Compare different down payments to get a sense of how it will impact your monthly mortgage bill and budget appropriately to make sure your income can continue to cover all of the essentials along with it. As a general rule, your monthly housing expenses should be 28 percent or less of your monthly income. For example, if you make $4,000 each month after taxes, you should aim to pay no more than $1,120 for your housing costs.
Your closing costs. In addition to a down payment, you’re going to need to cover closing costs, a range of fees associated with your mortgage that typically total 2 percent to 4 percent of your loan principal. Make sure that you have these funds set aside before determining your down payment.

You can use Bankrate’s down payment calculator to understand how different amounts will impact your bottom line. If you can afford a bigger down payment, remember not to stretch yourself too thin. You want to be able to enjoy living in that new house without depleting your entire savings and stressing about your finances.

How to save for a down payment

Regardless of what percentage you’re aiming to hit – 3 percent of the purchase price or 20 percent – you’ll need to put a plan in place to set aside that money. Here are some tips to focus on building up your down payment funds:

Start immediately. Even if you’re still comparing mortgage offers and determining how much you really need, earmark savings specifically for your new home as soon as possible.
Identify what to cut. Analyze your bank statements from the past few months to get a sense of where you can reduce spending and accelerate your savings. What can you cut? Can you eliminate some of your entertainment services?
Open a separate savings account. Keeping your down payment money with your other savings could tempt you to spend it elsewhere, so consider opening a separate account specifically for your home purchase. If you can, set up regular automatic deposits from your paycheck to your savings account so you’re more likely to stick to your savings plan.
Make a timeline. Once you know how much you need, look at how much you’ve already saved, and determine a timeline for when you want to achieve your savings goal. For example, if you want to save $20,000 in five years, you’ll need to save $4,000 per year, or $333 a month. You can also work the other way around and determine how much you can save each month by looking at your budget, and using that information as your timeline. Be sure to remember that home prices will be different in the future, too. They’ve been rising at a record pace recently. So, 10 percent of the median home price today may not hit that mark in three years.
Research assistance programs. You might be able to save less or buy a home sooner if you qualify for down payment assistance. The federal government and local and state governments, as well as nonprofit organizations, offer these types of programs to help make homeownership more affordable. They tend to be directed toward moderate- to low-income buyers who are purchasing their first home, but there are some options for repeat buyers, as well. Some even help public service workers, such as firefighters and teachers, buy a home in the communities they serve.

Down payment FAQs

Still searching for the right answers to decide how much to save for a down payment? These frequently asked questions can point you in the right direction.

How can I avoid PMI without putting 20 percent down?

No one wants to pay extra for mortgage insurance. If you’re putting down less than 20 percent on a conventional loan, there are a couple of options. The first is lender-paid mortgage insurance, which – as it sounds – puts the lender in charge of covering those mortgage insurance premiums. However, you will still pay in the form of a higher interest rate. You’ll need to calculate what’s better for your budget: paying the PMI yourself or finding an LPMI option.

The second option for avoiding PMI is an 80/10/10 loan, which is commonly called a piggyback loan. In this situation, you can put down 10 percent and take out two mortgages. One will cover 80 percent of the purchase price, and the other covers 10 percent. You’ll never see a line item for PMI, but you will be paying back two mortgages with two sets of interest charges. You’ll also pay two sets of closing costs to cover both loans.

What’s more important: Your down payment or mortgage payment?

You might be wondering what matters more – your upfront payment or your monthly financial obligation on a home. The reality is that they are both important, and one impacts the other. The more you can put down, the smaller your monthly payments will be. However, making a small down payment isn’t necessarily a bad move. While you’ll need to spend time saving up for that big down payment, that’s a one-time cost. Your mortgage payments are going to happen every month – perhaps for the next 30 years. So, do the math to make sure you can afford that recurring bill while paying other bills and saving for the future.

Can I use a gift for a down payment?

If you can’t come up with all the money for a down payment on your own, but you have a really great person in your life who wants to help you out, you’re in luck: You can accept a financial present from someone else. However, who can give that money to you depends on the type of loan. For conventional loans, it will need to be a family member. For FHA loans, there is a bit more flexibility to use gift funds from friends, labor unions and even employers. Regardless of your loan, getting a gift isn’t as simple as cashing a check. Be sure to read the rules for using gift funds for your down payment before receiving any money.

Can a lender or seller contribute to the down payment?

One party that cannot be part of a “gift” for a down payment is the seller. They qualify as a person with a vested interest in selling the house, which excludes them from being able to write you a check. They can, however, make concessions or offer credits (typically limited to a fraction of the sales price) at closing in designated amounts to cover specific items such as repairs on the property.

Lenders can play a role in helping certain borrowers – often those who qualify as low- to moderate-income – get to the finish line via down payment grant programs and lender credits that help offset closing costs. Not every lender offers down payment assistance options, so you’ll want to ask about availability as you compare loan programs.

How does down payment affect LTV?

You’ll see a lot of acronyms when you’re trying to buy a house, and one of the most important is LTV, which stands for loan-to-value ratio. Your down payment sets your initial LTV. For example, let’s say you’re planning to put $20,000 down on a house that has an appraised value of $200,000. In this case, your LTV would be 90 percent. You’re borrowing $180,000 – 90 percent of the home’s total value. As you make monthly payments and build equity, your loan-to-value ratio will change. Once your LTV hits 80 percent, it means you have 20 percent equity and the ability to cancel private mortgage insurance on a conventional loan.

Bottom line

Don’t let the 20 percent down payment myth prevent you from becoming a homeowner. Although some loans may charge higher interest rates if you put down less than 20 percent, and you may need to pay mortgage insurance, that extra cost can be worth it to get you on your way to building equity in your own home.

Written by David McMillin

6 March, 2022/by Carlos

BUSINESS, Informes, Present

What is the minimum down payment for a house?

If you’ve been dreaming of becoming a homeowner, one big concern may be weighing on you: coming up with the minimum down payment for a mortgage.

The median existing-home price was $352,800 in September 2021, according to data from the National Association of Realtors, and that number seems poised to jump even higher due to a hot housing market and low inventory in many parts of the country. However, you don’t have to let the asking price scare you away from looking at mortgage rates. Depending on the type of mortgage you choose and your willingness to pay for mortgage insurance, you may be able to buy a home with a small upfront down payment.

Let’s take a look at how much you really need in order to stop renting and start building equity in a home.

What is the minimum down payment for a house?

A down payment is the amount of money you contribute towards the purchase of a home. Think of it as the amount you initially put up as your share of ownership. The higher your down payment, the less you’re asking to borrow — and the lower your monthly payments will be.

Lenders require a down payment for most types of home loans, but there are exceptions for certain types of buyers. Here are the basic down payment requirements for various types of mortgages:

Loan type	Minimum down payment
Conventional loan	3%-15% depending on lender and loan
Jumbo loan	20% or more depending on lender
FHA loan	3.5%
VA loan	None required
USDA loan	None required

Conventional loans follow guidelines set by Fannie Mae and Freddie Mac, but lenders can have their own requirements above those standards, as well. There are conventional loan options that require a down payment of as little as 3 percent, but many lenders impose a 5 percent minimum. If the loan is for a vacation home or a multifamily property, you could be required to put down more, generally 10 percent and 15 percent, respectively.

Jumbo loans, which exceed the loan limits set by Fannie Mae and Freddie Mac, tend to require a higher down payment than other kinds of mortgages. These are larger sums, hence the “jumbo” name. The minimum is usually determined by the individual lender, but it can be 20 percent, 25 percent, 30 percent or more.

FHA loans, backed by the Federal Housing Administration, are available for as little as 3.5 percent down if the borrower has a credit score of at least 580. If the borrower has a lower score (500-579), the minimum down payment is 10 percent. FHA loans have other costs, though, including an upfront mortgage insurance premium and mortgage insurance throughout the life of the loan. One option to note: If you have a low credit score today, you can consider taking out an FHA loan and refinancing into a conventional loan when your credit improves down the road.

VA loans, which are available to active-duty military, veterans and eligible surviving spouses don’t require a down payment. USDA loans also don’t require a down payment, but the borrower needs to be buying in a designated rural location to qualify. There are other fees to consider with these government-backed loans, including a VA funding fee and an upfront fee of 1 percent of the loan amount with USDA-backed mortgages.

Average down payment for a house

Now that you have an understanding of the minimum amount for a down payment, you might be thinking about another question: How much is the average down payment for a house? The most recent data from the National Association of Realtors shows that the average homebuyer makes a down payment of 12 percent. However, to get a closer look at typical down payments, consider what different types of buyers can afford.

First-time homebuyers: 75 percent of first-time homebuyers do not put down 20 percent. In fact, the average first-time homebuyer puts down just 6 percent of the purchase price.

Current homeowners: For those who aren’t new to buying a home, the average down payment is higher: 16 percent of the purchase price.

Cash buyers: Some new homeowners with deep pockets don’t bother putting down a fraction of the purchase price. Instead, they pay for the entire property with an all-cash offer. In September 2021, the National Association of Realtors reported that 23 percent of all home purchases were cash sales.

Debunking the 20 percent down payment myth

You may have heard that 20 percent is the required minimum, but that’s not the case. Twenty percent is simply how much you need in order to avoid having to pay extra for mortgage insurance. The insurance is to protect the lender — since you’re borrowing more money with less down, you pose a bigger risk.

The reality is that as home prices continue to rise, many homebuyers can’t afford to put down 20 percent. In fact, 49 percent of all buyers put down less than 20 percent, according to the most recent data from the National Association of Realtors.

If so many are buying homes with smaller down payments, where did the 20 percent down payment myth come from? It’s most likely based on Fannie Mae and Freddie Mac guidelines. To qualify for a guarantee from either of these entities, a borrower needs to either put 20 percent down or pay mortgage insurance.

Is it worth putting down 20 percent?

So, you don’t have to put down 20 percent, but should you? That answer depends on a number of factors, but the most important is your own bank account. If you are sitting on plenty of cash and putting down 20 percent won’t stress your finances, it’s a good move to avoid costly mortgage insurance payments. However, if a 20 percent down payment will drain most of your bank account, you’ll want to think twice. Homeownership comes with loads of other expenses, and you need to be prepared for potential emergencies, too. If that means paying mortgage insurance for a while, that’s okay.

Consider some of the pros and cons about hitting the 20 percent threshold:

Down payment less than 20 percent

Pros

Stop renting sooner
Start building home equity now
Maintain more cash in your reserves
No mortgage insurance requirement
Lower borrowing amount means lower interest total over the life of the loan
Potential for lower monthly payments
Will qualify for better interest rates

Cons

Mortgage insurance payments
Potentially higher interest rates
Will not be able to buy a more expensive property
Larger loan balance means more interest over the life of the loan Cons
May drain a large chunk of your savings
May need more time to save enough to hit the magic 20 percent marker, which means delaying ownership

Down payment 20 percent or more

Pros

No mortgage insurance requirement
Lower borrowing amount means lower interest total over the life of the loan
Potential for lower monthly payments
Will qualify for better interest rates

Cons

May drain a large chunk of your savings
May need more time to save enough to hit the magic 20 percent marker, which means delaying ownership

What does a 20 percent down payment look like?

If you’re trying to determine what a 20 percent down payment will mean for your finances, the answer depends on where you’re looking to buy. Home values vary across the country, which means that saving up 20 percent of the purchase price in one city will be a lot easier (or harder) than in another area of the country. Consider the differences among these three markets, based on homes values in the middle of 2021:

Cedar Rapids, Iowa

Median home value: $188,400
20 percent down payment: $37,680

Phoenix, Arizona

Median home value: $408,700
20 percent down payment: $81,740

San Francisco, California

Median home value: $1,385,000

20 percent down payment: $277,000

How much should you put down on a house?

It’s important to understand how much the down payment for a house will impact your payments. Consider a $300,000 home and a 30-year fixed mortgage with a 3.2 percent interest rate with different down payments:

Home price	Down payment	Amount borrowed	Monthly mortgage payment (principal and interest)
$300,000	5% ($15,000)	$285,000	$1,232
$300,000	20% ($60,000)	$240,000	$1,037

The monthly mortgage payment above doesn’t include homeowners insurance, property taxes, and, for the 5 percent down payment scenario, mortgage insurance. That cost will vary, but consider an estimate from Freddie Mac that pegs monthly premiums for the above loan at $274. Making a 20 percent down payment means you won’t have to pay this added cost.

There’s another way to look at things, though. The premiums you have to pay on private mortgage insurance for a conventional loan are cancelled once you build 80 percent equity in the property. So, dealing with that extra cost temporarily can mean the difference between continuing to rent and buying your own place. Paying an extra fee is never fun, but it helps get you in a home of your own much faster.

Another important consideration: A higher down payment can get you a lower interest rate, further saving you money each month. We didn’t account for that in the example here, but it’s one more reason why a larger down payment can be beneficial.

As you think about how much to put down on your house, consider these key factors before settling on an amount:

Your emergency savings fund. If a crisis hits the week after you close on your home — say losing your job or receiving an expensive medical bill — will you have enough liquid savings to weather the storm? Additionally, you may have other emergencies related to the home. What if you buy it this fall and the furnace goes out this winter? Can you afford to repair it?
Your other monthly bills. What else are you paying for each month? Your car loan, phone service, groceries — none of these will disappear after you buy a home. Compare different down payments to get a sense of how it will impact your monthly mortgage bill and budget appropriately to make sure your income can continue to cover all of the essentials along with it. As a general rule, your monthly housing expenses should be 28 percent or less of your monthly income. For example, if you make $4,000 each month after taxes, you should aim to pay no more than $1,120 for your housing costs.
Your closing costs. In addition to a down payment, you’re going to need to cover closing costs, a range of fees associated with your mortgage that typically total 2 percent to 4 percent of your loan principal. Make sure that you have these funds set aside before determining your down payment.

You can use Bankrate’s down payment calculator to understand how different amounts will impact your bottom line. If you can afford a bigger down payment, remember not to stretch yourself too thin. You want to be able to enjoy living in that new house without depleting your entire savings and stressing about your finances.

How to save for a down payment

Regardless of what percentage you’re aiming to hit – 3 percent of the purchase price or 20 percent – you’ll need to put a plan in place to set aside that money. Here are some tips to focus on building up your down payment funds:

Start immediately. Even if you’re still comparing mortgage offers and determining how much you really need, earmark savings specifically for your new home as soon as possible.
Identify what to cut. Analyze your bank statements from the past few months to get a sense of where you can reduce spending and accelerate your savings. What can you cut? Can you eliminate some of your entertainment services?
Open a separate savings account. Keeping your down payment money with your other savings could tempt you to spend it elsewhere, so consider opening a separate account specifically for your home purchase. If you can, set up regular automatic deposits from your paycheck to your savings account so you’re more likely to stick to your savings plan.
Make a timeline. Once you know how much you need, look at how much you’ve already saved, and determine a timeline for when you want to achieve your savings goal. For example, if you want to save $20,000 in five years, you’ll need to save $4,000 per year, or $333 a month. You can also work the other way around and determine how much you can save each month by looking at your budget, and using that information as your timeline. Be sure to remember that home prices will be different in the future, too. They’ve been rising at a record pace recently. So, 10 percent of the median home price today may not hit that mark in three years.
Research assistance programs. You might be able to save less or buy a home sooner if you qualify for down payment assistance. The federal government and local and state governments, as well as nonprofit organizations, offer these types of programs to help make homeownership more affordable. They tend to be directed toward moderate- to low-income buyers who are purchasing their first home, but there are some options for repeat buyers, as well. Some even help public service workers, such as firefighters and teachers, buy a home in the communities they serve.

Down payment FAQs

Still searching for the right answers to decide how much to save for a down payment? These frequently asked questions can point you in the right direction.

How can I avoid PMI without putting 20 percent down?

No one wants to pay extra for mortgage insurance. If you’re putting down less than 20 percent on a conventional loan, there are a couple of options. The first is lender-paid mortgage insurance, which – as it sounds – puts the lender in charge of covering those mortgage insurance premiums. However, you will still pay in the form of a higher interest rate. You’ll need to calculate what’s better for your budget: paying the PMI yourself or finding an LPMI option.

The second option for avoiding PMI is an 80/10/10 loan, which is commonly called a piggyback loan. In this situation, you can put down 10 percent and take out two mortgages. One will cover 80 percent of the purchase price, and the other covers 10 percent. You’ll never see a line item for PMI, but you will be paying back two mortgages with two sets of interest charges. You’ll also pay two sets of closing costs to cover both loans.

What’s more important: Your down payment or mortgage payment?

You might be wondering what matters more – your upfront payment or your monthly financial obligation on a home. The reality is that they are both important, and one impacts the other. The more you can put down, the smaller your monthly payments will be. However, making a small down payment isn’t necessarily a bad move. While you’ll need to spend time saving up for that big down payment, that’s a one-time cost. Your mortgage payments are going to happen every month – perhaps for the next 30 years. So, do the math to make sure you can afford that recurring bill while paying other bills and saving for the future.

Can I use a gift for a down payment?

If you can’t come up with all the money for a down payment on your own, but you have a really great person in your life who wants to help you out, you’re in luck: You can accept a financial present from someone else. However, who can give that money to you depends on the type of loan. For conventional loans, it will need to be a family member. For FHA loans, there is a bit more flexibility to use gift funds from friends, labor unions and even employers. Regardless of your loan, getting a gift isn’t as simple as cashing a check. Be sure to read the rules for using gift funds for your down payment before receiving any money.

Can a lender or seller contribute to the down payment?

One party that cannot be part of a “gift” for a down payment is the seller. They qualify as a person with a vested interest in selling the house, which excludes them from being able to write you a check. They can, however, make concessions or offer credits (typically limited to a fraction of the sales price) at closing in designated amounts to cover specific items such as repairs on the property.

Lenders can play a role in helping certain borrowers – often those who qualify as low- to moderate-income – get to the finish line via down payment grant programs and lender credits that help offset closing costs. Not every lender offers down payment assistance options, so you’ll want to ask about availability as you compare loan programs.

How does down payment affect LTV?

You’ll see a lot of acronyms when you’re trying to buy a house, and one of the most important is LTV, which stands for loan-to-value ratio. Your down payment sets your initial LTV. For example, let’s say you’re planning to put $20,000 down on a house that has an appraised value of $200,000. In this case, your LTV would be 90 percent. You’re borrowing $180,000 – 90 percent of the home’s total value. As you make monthly payments and build equity, your loan-to-value ratio will change. Once your LTV hits 80 percent, it means you have 20 percent equity and the ability to cancel private mortgage insurance on a conventional loan.

Bottom line

Don’t let the 20 percent down payment myth prevent you from becoming a homeowner. Although some loans may charge higher interest rates if you put down less than 20 percent, and you may need to pay mortgage insurance, that extra cost can be worth it to get you on your way to building equity in your own home.

Written by David McMillin

6 March, 2022/by Carlos

Actualidad, BUSINESS, Informes

What is the minimum down payment for a house?

If you’ve been dreaming of becoming a homeowner, one big concern may be weighing on you: coming up with the minimum down payment for a mortgage.

The median existing-home price was $352,800 in September 2021, according to data from the National Association of Realtors, and that number seems poised to jump even higher due to a hot housing market and low inventory in many parts of the country. However, you don’t have to let the asking price scare you away from looking at mortgage rates. Depending on the type of mortgage you choose and your willingness to pay for mortgage insurance, you may be able to buy a home with a small upfront down payment.

Let’s take a look at how much you really need in order to stop renting and start building equity in a home.

What is the minimum down payment for a house?

A down payment is the amount of money you contribute towards the purchase of a home. Think of it as the amount you initially put up as your share of ownership. The higher your down payment, the less you’re asking to borrow — and the lower your monthly payments will be.

Lenders require a down payment for most types of home loans, but there are exceptions for certain types of buyers. Here are the basic down payment requirements for various types of mortgages:

Loan type	Minimum down payment
Conventional loan	3%-15% depending on lender and loan
Jumbo loan	20% or more depending on lender
FHA loan	3.5%
VA loan	None required
USDA loan	None required

Conventional loans follow guidelines set by Fannie Mae and Freddie Mac, but lenders can have their own requirements above those standards, as well. There are conventional loan options that require a down payment of as little as 3 percent, but many lenders impose a 5 percent minimum. If the loan is for a vacation home or a multifamily property, you could be required to put down more, generally 10 percent and 15 percent, respectively.

Jumbo loans, which exceed the loan limits set by Fannie Mae and Freddie Mac, tend to require a higher down payment than other kinds of mortgages. These are larger sums, hence the “jumbo” name. The minimum is usually determined by the individual lender, but it can be 20 percent, 25 percent, 30 percent or more.

FHA loans, backed by the Federal Housing Administration, are available for as little as 3.5 percent down if the borrower has a credit score of at least 580. If the borrower has a lower score (500-579), the minimum down payment is 10 percent. FHA loans have other costs, though, including an upfront mortgage insurance premium and mortgage insurance throughout the life of the loan. One option to note: If you have a low credit score today, you can consider taking out an FHA loan and refinancing into a conventional loan when your credit improves down the road.

VA loans, which are available to active-duty military, veterans and eligible surviving spouses don’t require a down payment. USDA loans also don’t require a down payment, but the borrower needs to be buying in a designated rural location to qualify. There are other fees to consider with these government-backed loans, including a VA funding fee and an upfront fee of 1 percent of the loan amount with USDA-backed mortgages.

Average down payment for a house

Now that you have an understanding of the minimum amount for a down payment, you might be thinking about another question: How much is the average down payment for a house? The most recent data from the National Association of Realtors shows that the average homebuyer makes a down payment of 12 percent. However, to get a closer look at typical down payments, consider what different types of buyers can afford.

First-time homebuyers: 75 percent of first-time homebuyers do not put down 20 percent. In fact, the average first-time homebuyer puts down just 6 percent of the purchase price.

Current homeowners: For those who aren’t new to buying a home, the average down payment is higher: 16 percent of the purchase price.

Cash buyers: Some new homeowners with deep pockets don’t bother putting down a fraction of the purchase price. Instead, they pay for the entire property with an all-cash offer. In September 2021, the National Association of Realtors reported that 23 percent of all home purchases were cash sales.

Debunking the 20 percent down payment myth

You may have heard that 20 percent is the required minimum, but that’s not the case. Twenty percent is simply how much you need in order to avoid having to pay extra for mortgage insurance. The insurance is to protect the lender — since you’re borrowing more money with less down, you pose a bigger risk.

The reality is that as home prices continue to rise, many homebuyers can’t afford to put down 20 percent. In fact, 49 percent of all buyers put down less than 20 percent, according to the most recent data from the National Association of Realtors.

If so many are buying homes with smaller down payments, where did the 20 percent down payment myth come from? It’s most likely based on Fannie Mae and Freddie Mac guidelines. To qualify for a guarantee from either of these entities, a borrower needs to either put 20 percent down or pay mortgage insurance.

Is it worth putting down 20 percent?

So, you don’t have to put down 20 percent, but should you? That answer depends on a number of factors, but the most important is your own bank account. If you are sitting on plenty of cash and putting down 20 percent won’t stress your finances, it’s a good move to avoid costly mortgage insurance payments. However, if a 20 percent down payment will drain most of your bank account, you’ll want to think twice. Homeownership comes with loads of other expenses, and you need to be prepared for potential emergencies, too. If that means paying mortgage insurance for a while, that’s okay.

Consider some of the pros and cons about hitting the 20 percent threshold:

Down payment less than 20 percent

Pros

Stop renting sooner
Start building home equity now
Maintain more cash in your reserves
No mortgage insurance requirement
Lower borrowing amount means lower interest total over the life of the loan
Potential for lower monthly payments
Will qualify for better interest rates

Cons

Mortgage insurance payments
Potentially higher interest rates
Will not be able to buy a more expensive property
Larger loan balance means more interest over the life of the loan Cons
May drain a large chunk of your savings
May need more time to save enough to hit the magic 20 percent marker, which means delaying ownership

Down payment 20 percent or more

Pros

No mortgage insurance requirement
Lower borrowing amount means lower interest total over the life of the loan
Potential for lower monthly payments
Will qualify for better interest rates

Cons

May drain a large chunk of your savings
May need more time to save enough to hit the magic 20 percent marker, which means delaying ownership

What does a 20 percent down payment look like?

If you’re trying to determine what a 20 percent down payment will mean for your finances, the answer depends on where you’re looking to buy. Home values vary across the country, which means that saving up 20 percent of the purchase price in one city will be a lot easier (or harder) than in another area of the country. Consider the differences among these three markets, based on homes values in the middle of 2021:

Cedar Rapids, Iowa

Median home value: $188,400
20 percent down payment: $37,680

Phoenix, Arizona

Median home value: $408,700
20 percent down payment: $81,740

San Francisco, California

Median home value: $1,385,000

20 percent down payment: $277,000

How much should you put down on a house?

It’s important to understand how much the down payment for a house will impact your payments. Consider a $300,000 home and a 30-year fixed mortgage with a 3.2 percent interest rate with different down payments:

Home price	Down payment	Amount borrowed	Monthly mortgage payment (principal and interest)
$300,000	5% ($15,000)	$285,000	$1,232
$300,000	20% ($60,000)	$240,000	$1,037

The monthly mortgage payment above doesn’t include homeowners insurance, property taxes, and, for the 5 percent down payment scenario, mortgage insurance. That cost will vary, but consider an estimate from Freddie Mac that pegs monthly premiums for the above loan at $274. Making a 20 percent down payment means you won’t have to pay this added cost.

There’s another way to look at things, though. The premiums you have to pay on private mortgage insurance for a conventional loan are cancelled once you build 80 percent equity in the property. So, dealing with that extra cost temporarily can mean the difference between continuing to rent and buying your own place. Paying an extra fee is never fun, but it helps get you in a home of your own much faster.

Another important consideration: A higher down payment can get you a lower interest rate, further saving you money each month. We didn’t account for that in the example here, but it’s one more reason why a larger down payment can be beneficial.

As you think about how much to put down on your house, consider these key factors before settling on an amount:

Your emergency savings fund. If a crisis hits the week after you close on your home — say losing your job or receiving an expensive medical bill — will you have enough liquid savings to weather the storm? Additionally, you may have other emergencies related to the home. What if you buy it this fall and the furnace goes out this winter? Can you afford to repair it?
Your other monthly bills. What else are you paying for each month? Your car loan, phone service, groceries — none of these will disappear after you buy a home. Compare different down payments to get a sense of how it will impact your monthly mortgage bill and budget appropriately to make sure your income can continue to cover all of the essentials along with it. As a general rule, your monthly housing expenses should be 28 percent or less of your monthly income. For example, if you make $4,000 each month after taxes, you should aim to pay no more than $1,120 for your housing costs.
Your closing costs. In addition to a down payment, you’re going to need to cover closing costs, a range of fees associated with your mortgage that typically total 2 percent to 4 percent of your loan principal. Make sure that you have these funds set aside before determining your down payment.

You can use Bankrate’s down payment calculator to understand how different amounts will impact your bottom line. If you can afford a bigger down payment, remember not to stretch yourself too thin. You want to be able to enjoy living in that new house without depleting your entire savings and stressing about your finances.

How to save for a down payment

Regardless of what percentage you’re aiming to hit – 3 percent of the purchase price or 20 percent – you’ll need to put a plan in place to set aside that money. Here are some tips to focus on building up your down payment funds:

Start immediately. Even if you’re still comparing mortgage offers and determining how much you really need, earmark savings specifically for your new home as soon as possible.
Identify what to cut. Analyze your bank statements from the past few months to get a sense of where you can reduce spending and accelerate your savings. What can you cut? Can you eliminate some of your entertainment services?
Open a separate savings account. Keeping your down payment money with your other savings could tempt you to spend it elsewhere, so consider opening a separate account specifically for your home purchase. If you can, set up regular automatic deposits from your paycheck to your savings account so you’re more likely to stick to your savings plan.
Make a timeline. Once you know how much you need, look at how much you’ve already saved, and determine a timeline for when you want to achieve your savings goal. For example, if you want to save $20,000 in five years, you’ll need to save $4,000 per year, or $333 a month. You can also work the other way around and determine how much you can save each month by looking at your budget, and using that information as your timeline. Be sure to remember that home prices will be different in the future, too. They’ve been rising at a record pace recently. So, 10 percent of the median home price today may not hit that mark in three years.
Research assistance programs. You might be able to save less or buy a home sooner if you qualify for down payment assistance. The federal government and local and state governments, as well as nonprofit organizations, offer these types of programs to help make homeownership more affordable. They tend to be directed toward moderate- to low-income buyers who are purchasing their first home, but there are some options for repeat buyers, as well. Some even help public service workers, such as firefighters and teachers, buy a home in the communities they serve.

Down payment FAQs

Still searching for the right answers to decide how much to save for a down payment? These frequently asked questions can point you in the right direction.

How can I avoid PMI without putting 20 percent down?

No one wants to pay extra for mortgage insurance. If you’re putting down less than 20 percent on a conventional loan, there are a couple of options. The first is lender-paid mortgage insurance, which – as it sounds – puts the lender in charge of covering those mortgage insurance premiums. However, you will still pay in the form of a higher interest rate. You’ll need to calculate what’s better for your budget: paying the PMI yourself or finding an LPMI option.

The second option for avoiding PMI is an 80/10/10 loan, which is commonly called a piggyback loan. In this situation, you can put down 10 percent and take out two mortgages. One will cover 80 percent of the purchase price, and the other covers 10 percent. You’ll never see a line item for PMI, but you will be paying back two mortgages with two sets of interest charges. You’ll also pay two sets of closing costs to cover both loans.

What’s more important: Your down payment or mortgage payment?

You might be wondering what matters more – your upfront payment or your monthly financial obligation on a home. The reality is that they are both important, and one impacts the other. The more you can put down, the smaller your monthly payments will be. However, making a small down payment isn’t necessarily a bad move. While you’ll need to spend time saving up for that big down payment, that’s a one-time cost. Your mortgage payments are going to happen every month – perhaps for the next 30 years. So, do the math to make sure you can afford that recurring bill while paying other bills and saving for the future.

Can I use a gift for a down payment?

If you can’t come up with all the money for a down payment on your own, but you have a really great person in your life who wants to help you out, you’re in luck: You can accept a financial present from someone else. However, who can give that money to you depends on the type of loan. For conventional loans, it will need to be a family member. For FHA loans, there is a bit more flexibility to use gift funds from friends, labor unions and even employers. Regardless of your loan, getting a gift isn’t as simple as cashing a check. Be sure to read the rules for using gift funds for your down payment before receiving any money.

Can a lender or seller contribute to the down payment?

One party that cannot be part of a “gift” for a down payment is the seller. They qualify as a person with a vested interest in selling the house, which excludes them from being able to write you a check. They can, however, make concessions or offer credits (typically limited to a fraction of the sales price) at closing in designated amounts to cover specific items such as repairs on the property.

Lenders can play a role in helping certain borrowers – often those who qualify as low- to moderate-income – get to the finish line via down payment grant programs and lender credits that help offset closing costs. Not every lender offers down payment assistance options, so you’ll want to ask about availability as you compare loan programs.

How does down payment affect LTV?

You’ll see a lot of acronyms when you’re trying to buy a house, and one of the most important is LTV, which stands for loan-to-value ratio. Your down payment sets your initial LTV. For example, let’s say you’re planning to put $20,000 down on a house that has an appraised value of $200,000. In this case, your LTV would be 90 percent. You’re borrowing $180,000 – 90 percent of the home’s total value. As you make monthly payments and build equity, your loan-to-value ratio will change. Once your LTV hits 80 percent, it means you have 20 percent equity and the ability to cancel private mortgage insurance on a conventional loan.

Bottom line

Don’t let the 20 percent down payment myth prevent you from becoming a homeowner. Although some loans may charge higher interest rates if you put down less than 20 percent, and you may need to pay mortgage insurance, that extra cost can be worth it to get you on your way to building equity in your own home.

Written by David McMillin

6 March, 2022/by Carlos

Actualidad, BUSINESS, Informes

¿Cuál es el pago inicial mínimo para una casa?

Si ha estado soñando con convertirse en propietario de una vivienda, es posible que le esté pesando una gran preocupación: calcular el pago inicial mínimo para una hipoteca.

El precio medio de una vivienda existente era de $352,800 en septiembre de 2021, según datos de la Asociación Nacional de Agentes Inmobiliarios, y ese número parece estar a punto de aumentar aún más debido a un mercado inmobiliario activo y un inventario bajo en muchas partes del país. Sin embargo, no tiene que dejar que el precio de venta lo asuste y deje de mirar las tasas hipotecarias . Según el tipo de hipoteca que elija y su disposición a pagar el seguro hipotecario, es posible que pueda comprar una casa con un pequeño pago inicial.

Echemos un vistazo a cuánto necesita realmente para dejar de alquilar y comenzar a acumular capital en una casa.

¿Cuál es el pago inicial mínimo para una casa?

Un pago inicial es la cantidad de dinero que contribuye para la compra de una casa. Piense en ello como la cantidad que inicialmente aportó como su parte de propiedad. Cuanto mayor sea su pago inicial, menos pedirá prestado y menores serán sus pagos mensuales.

Los prestamistas requieren un pago inicial para la mayoría de los tipos de préstamos hipotecarios, pero hay excepciones para ciertos tipos de compradores. Estos son los requisitos básicos de pago inicial para varios tipos de hipotecas:

tipo de préstamo	Pago inicial mínimo
Préstamo convencional	3%-15% según el prestamista y el préstamo
préstamo gigante	20% o más dependiendo del prestamista
préstamo de la FHA	3.5%
préstamo VA	Ninguno requerido
préstamo USDA	Ninguno requerido

Los préstamos convencionales siguen las pautas establecidas por Fannie Mae y Freddie Mac, pero los prestamistas también pueden tener sus propios requisitos por encima de esos estándares. Hay opciones de préstamos convencionales que requieren un pago inicial de tan solo el 3 por ciento, pero muchos prestamistas imponen un mínimo del 5 por ciento. Si el préstamo es para una casa de vacaciones o una propiedad multifamiliar, es posible que deba hacer un pago inicial mayor, generalmente 10 por ciento y 15 por ciento, respectivamente.

Los préstamos jumbo , que exceden los límites de préstamo establecidos por Fannie Mae y Freddie Mac, tienden a requerir un pago inicial más alto que otros tipos de hipotecas. Estas son sumas más grandes, de ahí el nombre “jumbo”. El mínimo generalmente lo determina el prestamista individual, pero puede ser 20 por ciento, 25 por ciento, 30 por ciento o más.

Los préstamos de la FHA , respaldados por la Administración Federal de Vivienda, están disponibles por tan solo un 3.5 por ciento de enganche si el prestatario tiene un puntaje crediticio de al menos 580. Si el prestatario tiene un puntaje más bajo (500-579), el pago inicial mínimo es 10 por ciento. Sin embargo, los préstamos de la FHA tienen otros costos, incluida una prima de seguro hipotecario por adelantado y un seguro hipotecario durante la vigencia del préstamo. Una opción a tener en cuenta: si tiene un puntaje de crédito bajo hoy, puede considerar obtener un préstamo de la FHA y refinanciar en un préstamo convencional cuando su crédito mejore en el futuro.

Los préstamos VA , que están disponibles para militares en servicio activo, veteranos y cónyuges sobrevivientes elegibles, no requieren un pago inicial. Los préstamos del USDA tampoco requieren un pago inicial, pero el prestatario debe comprar en una ubicación rural designada para calificar. Hay otras tarifas a considerar con estos préstamos respaldados por el gobierno, incluida una tarifa de financiación VA y una tarifa inicial del 1 por ciento del monto del préstamo con hipotecas respaldadas por USDA.

Pago inicial promedio de una casa

Ahora que comprende el monto mínimo para el pago inicial, es posible que esté pensando en otra pregunta: ¿Cuánto es el pago inicial promedio de una casa? Los datos más recientes de la Asociación Nacional de Agentes Inmobiliarios muestran que el comprador de vivienda promedio hace un pago inicial del 12 por ciento. Sin embargo, para ver más de cerca los pagos iniciales típicos, considere lo que pueden pagar los diferentes tipos de compradores.

Compradores de vivienda por primera vez: el 75 por ciento de los compradores de vivienda por primera vez no pagan el 20 por ciento. De hecho, el comprador de vivienda promedio por primera vez deposita solo el 6 por ciento del precio de compra.

Propietarios actuales: Para aquellos que no son nuevos en la compra de una casa, el pago inicial promedio es más alto: 16 por ciento del precio de compra.

Compradores en efectivo: algunos nuevos propietarios con mucho dinero no se molestan en pagar una fracción del precio de compra. En cambio, pagan por toda la propiedad con una oferta en efectivo. En septiembre de 2021, la Asociación Nacional de Agentes Inmobiliarios informó que el 23 por ciento de todas las compras de viviendas fueron ventas en efectivo.

Desacreditando el mito del pago inicial del 20 por ciento

Es posible que haya escuchado que el 20 por ciento es el mínimo requerido, pero ese no es el caso. Veinte por ciento es simplemente cuánto necesita para evitar tener que pagar más por el seguro hipotecario. El seguro es para proteger al prestamista: dado que está pidiendo prestado más dinero con menos pago inicial, representa un riesgo mayor.

La realidad es que a medida que los precios de las viviendas continúan aumentando, muchos compradores de viviendas no pueden pagar el 20 por ciento. De hecho, el 49 por ciento de todos los compradores dieron menos del 20 por ciento, según los datos más recientes de la Asociación Nacional de Agentes Inmobiliarios.

Si tantos están comprando casas con pagos iniciales más pequeños, ¿de dónde viene el mito del pago inicial del 20 por ciento? Lo más probable es que se base en las pautas de Fannie Mae y Freddie Mac. Para calificar para una garantía de cualquiera de estas entidades, el prestatario debe hacer un pago inicial del 20 por ciento o pagar un seguro hipotecario.

¿Vale la pena poner un 20 por ciento?

Entonces, no tiene que poner el 20 por ciento, pero ¿debería hacerlo? Esa respuesta depende de una serie de factores, pero el más importante es su propia cuenta bancaria. Si tiene mucho dinero en efectivo y poner el 20 por ciento no estresará sus finanzas, es una buena medida para evitar los costosos pagos del seguro hipotecario. Sin embargo, si un pago inicial del 20 por ciento agota la mayor parte de su cuenta bancaria, querrá pensarlo dos veces. Ser propietario de una vivienda conlleva muchos otros gastos, y también debe estar preparado para posibles emergencias. Si eso significa pagar un seguro hipotecario por un tiempo, está bien.

Considere algunos de los pros y los contras de alcanzar el umbral del 20 por ciento:

Pago inicial inferior al 20 por ciento

ventajas

Deja de alquilar antes
Comience a acumular capital inmobiliario ahora
Mantenga más efectivo en sus reservas
Sin requisito de seguro hipotecario
Un monto de préstamo más bajo significa un total de interés más bajo durante la vida del préstamo
Posibilidad de pagos mensuales más bajos
Calificará para mejores tasas de interés

Contras

Pagos del seguro hipotecario
Tasas de interés potencialmente más altas
No podrá comprar una propiedad más cara.
Un saldo de préstamo más grande significa más interés durante la vida del préstamo Contras
Puede agotar una gran parte de sus ahorros
Puede necesitar más tiempo para ahorrar lo suficiente para alcanzar el marcador mágico del 20 por ciento, lo que significa retrasar la propiedad

Pago inicial del 20 por ciento o más

ventajas

Sin requisito de seguro hipotecario
Un monto de préstamo más bajo significa un total de interés más bajo durante la vida del préstamo
Posibilidad de pagos mensuales más bajos
Calificará para mejores tasas de interés

Contras

Puede agotar una gran parte de sus ahorros
Puede necesitar más tiempo para ahorrar lo suficiente para alcanzar el marcador mágico del 20 por ciento, lo que significa retrasar la propiedad

¿Cómo es un pago inicial del 20 por ciento?

Si está tratando de determinar qué significará un pago inicial del 20 por ciento para sus finanzas, la respuesta depende de dónde esté buscando comprar. Los valores de las viviendas varían en todo el país, lo que significa que ahorrar hasta el 20 por ciento del precio de compra en una ciudad será mucho más fácil (o más difícil) que en otra zona del país. Considere las diferencias entre estos tres mercados, según los valores de las viviendas a mediados de 2021:

Cedar Rapids, Iowa

Valor medio de la vivienda: $ 188,400
Pago inicial del 20 por ciento: $ 37,680

Phoenix, Arizona

Valor medio de la vivienda: $ 408,700
Pago inicial del 20 por ciento: $ 81,740

San Francisco, California

Valor medio de la vivienda: $ 1,385,000

Pago inicial del 20 por ciento: $ 277,000

¿Cuánto se debe poner en una casa?

Es importante comprender cuánto afectará el pago inicial de una casa a sus pagos. Considere una casa de $300,000 y una hipoteca fija a 30 años con una tasa de interés del 3.2 por ciento con diferentes pagos iniciales:

Precio de la vivienda	Depósito	cantidad prestada	Pago hipotecario mensual (principal e intereses)
$300,000	5% ($15,000)	$285,000	$1,232
$300,000	20% ($60,000)	$240,000	$1,037

El pago hipotecario mensual anterior no incluye el seguro de propiedad, los impuestos sobre la propiedad y, para el escenario de pago inicial del 5 por ciento, el seguro hipotecario. Ese costo variará, pero considere una estimación de Freddie Mac que fija las primas mensuales para el préstamo anterior en $274. Hacer un pago inicial del 20 por ciento significa que no tendrá que pagar este costo adicional.

Sin embargo, hay otra forma de ver las cosas. Las primas que tiene que pagar en el seguro hipotecario privado para un préstamo convencional se cancelan una vez que acumula el 80 por ciento de capital en la propiedad. Entonces, lidiar con ese costo adicional temporalmente puede significar la diferencia entre continuar alquilando y comprar su propio lugar. Pagar una tarifa adicional nunca es divertido, pero lo ayuda a tener una casa propia mucho más rápido.

Otra consideración importante: un pago inicial más alto puede generarle una tasa de interés más baja, lo que le permite ahorrar más dinero cada mes. No lo tomamos en cuenta en el ejemplo aquí, pero es una razón más por la cual un pago inicial más grande puede ser beneficioso.

Mientras piensa en cuánto depositar en su casa, considere estos factores clave antes de decidirse por una cantidad:

Tu fondo de ahorro de emergencia . Si una crisis golpea la semana después de cerrar su casa, por ejemplo, perder su trabajo o recibir una factura médica costosa, ¿tendrá suficientes ahorros líquidos para capear la tormenta? Además, es posible que tenga otras emergencias relacionadas con el hogar. ¿Qué pasa si lo compras este otoño y el horno se apaga este invierno? ¿Puede permitirse el lujo de repararlo?
Sus otras facturas mensuales . ¿Qué más estás pagando cada mes? Su préstamo de automóvil, servicio telefónico, comestibles: nada de esto desaparecerá después de comprar una casa. Compare diferentes pagos iniciales para tener una idea de cómo afectará su factura hipotecaria mensual y el presupuesto adecuado para asegurarse de que sus ingresos puedan continuar cubriendo todos los elementos esenciales junto con ellos. Como regla general, sus gastos de vivienda mensuales deben ser el 28 por ciento o menos de sus ingresos mensuales. Por ejemplo, si gana $ 4,000 cada mes después de impuestos, debe intentar pagar no más de $ 1,120 por sus costos de vivienda.
Sus costos de cierre . Además del pago inicial, necesitará cubrir los costos de cierre, una variedad de cargos asociados con su hipoteca que generalmente totalizan entre el 2 y el 4 por ciento del capital de su préstamo. Asegúrese de tener estos fondos reservados antes de determinar su pago inicial.

Puede usar la calculadora de pago inicial de Bankrate para comprender cómo las diferentes cantidades afectarán sus resultados. Si puede permitirse un pago inicial mayor, recuerde no esforzarse demasiado. Desea poder disfrutar de la vida en esa nueva casa sin agotar todos sus ahorros y estresarse por sus finanzas.

Cómo ahorrar para el pago inicial

Independientemente del porcentaje que desee alcanzar (el 3 por ciento del precio de compra o el 20 por ciento), deberá establecer un plan para reservar ese dinero. Estos son algunos consejos para concentrarse en la creación de sus fondos de pago inicial :

Empieza inmediatamente. Incluso si todavía está comparando ofertas de hipotecas y determinando cuánto necesita realmente, destine los ahorros específicamente para su nuevo hogar lo antes posible.
Identifica qué cortar. Analice sus extractos bancarios de los últimos meses para tener una idea de dónde puede reducir sus gastos y acelerar sus ahorros. ¿Qué puedes cortar? ¿Puedes eliminar algunos de tus servicios de entretenimiento?
Abra una cuenta de ahorros separada . Mantener el dinero de su pago inicial con sus otros ahorros podría tentarlo a gastarlo en otra parte, así que considere abrir una cuenta separada específicamente para la compra de su casa. Si puede, configure depósitos automáticos regulares de su cheque de pago a su cuenta de ahorros para que sea más probable que cumpla con su plan de ahorros.
Haz una línea de tiempo. Una vez que sepa cuánto necesita, mire cuánto ya ha ahorrado y determine un cronograma para cuando desee alcanzar su objetivo de ahorro. Por ejemplo, si desea ahorrar $20,000 en cinco años, deberá ahorrar $4,000 por año o $333 por mes. También puede trabajar al revés y determinar cuánto puede ahorrar cada mes mirando su presupuesto y usando esa información como su línea de tiempo. Asegúrese de recordar que los precios de las viviendas también serán diferentes en el futuro. Han estado aumentando a un ritmo récord recientemente. Por lo tanto, es posible que el 10 por ciento del precio promedio de una vivienda hoy no alcance esa marca en tres años.
Programas de ayuda a la investigación. Es posible que pueda ahorrar menos o comprar una casa antes si califica para asistencia con el pago inicial . El gobierno federal y los gobiernos locales y estatales, así como las organizaciones sin fines de lucro, ofrecen este tipo de programas para ayudar a que la propiedad de vivienda sea más asequible. Tienden a estar dirigidos a compradores de ingresos moderados a bajos que están comprando su primera casa, pero también hay algunas opciones para compradores repetidos. Algunos incluso ayudan a los trabajadores de los servicios públicos, como los bomberos y los maestros, a comprar una casa en las comunidades a las que sirven.

Preguntas frecuentes sobre el pago inicial

¿Sigue buscando las respuestas correctas para decidir cuánto ahorrar para el pago inicial? Estas preguntas frecuentes pueden orientarlo en la dirección correcta.

¿Cómo puedo evitar el PMI sin hacer un pago inicial del 20 por ciento?

Nadie quiere pagar extra por el seguro hipotecario. Si está poniendo menos del 20 por ciento de un préstamo convencional, hay un par de opciones. El primero es el seguro hipotecario pagado por el prestamista , que, como parece, pone al prestamista a cargo de cubrir esas primas de seguro hipotecario. Sin embargo, seguirá pagando en forma de una tasa de interés más alta. Deberá calcular qué es mejor para su presupuesto: pagar el PMI usted mismo o encontrar una opción de LPMI.

La segunda opción para evitar el PMI es un préstamo 80/10/10 , que comúnmente se denomina préstamo piggyback. En esta situación, puede hacer un pago inicial del 10 por ciento y sacar dos hipotecas. Uno cubrirá el 80 por ciento del precio de compra y el otro cubrirá el 10 por ciento. Nunca verá una partida para el PMI, pero pagará dos hipotecas con dos conjuntos de cargos por intereses. También pagará dos conjuntos de costos de cierre para cubrir ambos préstamos.

¿Qué es más importante: el pago inicial o el pago de la hipoteca?

Quizás se pregunte qué es más importante: su pago inicial o su obligación financiera mensual en una casa. La realidad es que ambos son importantes y uno impacta al otro. Cuanto más pueda depositar, menores serán sus pagos mensuales. Sin embargo, hacer un pequeño pago inicial no es necesariamente una mala decisión. Si bien deberá dedicar tiempo a ahorrar para ese gran pago inicial, ese es un costo único. Los pagos de su hipoteca se realizarán todos los meses, tal vez durante los próximos 30 años. Por lo tanto, haga los cálculos para asegurarse de que puede pagar esa factura recurrente mientras paga otras facturas y ahorra para el futuro.

¿Puedo usar un regalo para el pago inicial?

Si no puede reunir todo el dinero para el pago inicial por su cuenta, pero tiene una gran persona en su vida que quiere ayudarlo, tiene suerte: puede aceptar un regalo financiero de alguien. demás. Sin embargo, quién puede darte ese dinero depende del tipo de préstamo. Para los préstamos convencionales, será necesario que sea un familiar. Para los préstamos de la FHA, hay un poco más de flexibilidad para usar fondos de regalo de amigos, sindicatos e incluso empleadores. Independientemente de su préstamo, obtener un regalo no es tan simple como cobrar un cheque. Asegúrese de leer las reglas para usar fondos de regalo para su pago inicial antes de recibir dinero.

¿Puede un prestamista o vendedor contribuir al pago inicial?

Una parte que no puede ser parte de un “regalo” para un pago inicial es el vendedor. Califican como una persona con un interés creado en vender la casa, lo que los excluye de poder girarle un cheque. Sin embargo, pueden hacer concesiones u ofrecer créditos (generalmente limitados a una fracción del precio de venta) al cierre en montos designados para cubrir artículos específicos, como reparaciones en la propiedad.

Los prestamistas pueden desempeñar un papel para ayudar a ciertos prestatarios, a menudo aquellos que califican como de ingresos bajos a moderados, a llegar a la meta a través de programas de subvenciones de pago inicial y créditos de prestamistas que ayudan a compensar los costos de cierre. No todos los prestamistas ofrecen opciones de asistencia para el pago inicial, por lo que querrá preguntar sobre la disponibilidad al comparar los programas de préstamos.

¿Cómo afecta el pago inicial al LTV?

Verá muchos acrónimos cuando intente comprar una casa, y uno de los más importantes es LTV , que significa relación préstamo-valor. Su pago inicial establece su LTV inicial. Por ejemplo, supongamos que planea poner $20,000 de enganche en una casa que tiene un valor de tasación de $200,000. En este caso, su LTV sería del 90 por ciento. Pide prestados $180,000, el 90 por ciento del valor total de la casa. A medida que realiza pagos mensuales y acumula capital, su relación préstamo-valor cambiará. Una vez que su LTV alcanza el 80 por ciento, significa que tiene un capital del 20 por ciento y la capacidad de cancelar el seguro hipotecario privado en un préstamo convencional.

Línea de fondo

No permita que el mito del pago inicial del 20 por ciento le impida convertirse en propietario de una vivienda. Aunque algunos préstamos pueden cobrar tasas de interés más altas si deposita menos del 20 por ciento, y es posible que deba pagar un seguro hipotecario, ese costo adicional puede valer la pena para ayudarlo a construir equidad en su propia casa.

Escrito por David Mc Millin

6 March, 2022/by Carlos

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What does a 20 percent down payment look like?

How much should you put down on a house?

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How can I avoid PMI without putting 20 percent down?

What’s more important: Your down payment or mortgage payment?

Can I use a gift for a down payment?

Can a lender or seller contribute to the down payment?

How does down payment affect LTV?

Bottom line

Why you can trust Bankrate

What is the minimum down payment for a house?

Average down payment for a house

Debunking the 20 percent down payment myth

Is it worth putting down 20 percent?

Down payment less than 20 percent

Down payment 20 percent or more

What does a 20 percent down payment look like?

How much should you put down on a house?

How to save for a down payment

Down payment FAQs

How can I avoid PMI without putting 20 percent down?

What’s more important: Your down payment or mortgage payment?

Can I use a gift for a down payment?

Can a lender or seller contribute to the down payment?

How does down payment affect LTV?

Bottom line

Why you can trust Bankrate

What is the minimum down payment for a house?

Average down payment for a house

Debunking the 20 percent down payment myth

Is it worth putting down 20 percent?

Down payment less than 20 percent

Down payment 20 percent or more

What does a 20 percent down payment look like?

How much should you put down on a house?

How to save for a down payment

Down payment FAQs

How can I avoid PMI without putting 20 percent down?

What’s more important: Your down payment or mortgage payment?

Can I use a gift for a down payment?

Can a lender or seller contribute to the down payment?

How does down payment affect LTV?

Bottom line

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