What is a Down Payment
The amount of your down payment will depend primarily on 3 things:
- 1.The price of the home you want to purchase
- 2.The requirements of the loan program you are applying for
- 3.Your specific financial situation
Examples of possible requirements:
Down payment requirements vary in range depending on a number of factors. The median down payment in 2020 was 7 percent of the purchase price for first-time homebuyers and 16 percent for repeat buyers.
How much should you pay?
- 1.Some sources may encourage you to pay as much as you can for a down payment (within your financial means) in an effort to lower your monthly payments. This can also minimize the interest you’ll pay during the life of the loan.
- 2.Other sources may suggest paying the minimum required down payment in order to have a bit of a financial buffer for fees/closing costs, maintenance to your home, or for monthly payments.
- 3.It’s best to assess your financial situation (and possibly consult a financial advisor) to determine whether more money saved on interest or more financial flexibility for expenses (expected or unexpected) is a higher priority for you.
