Down payments can be confusing. One of the biggest questions when it comes to buying a home is how much to put down. Some say to put down 10%, some say 20%. There are also loan programs that can affect how much you put down on a home purchase.
Types of loans
The type of loan you receive is going to be the biggest factor when deciding how much money to put down on your home purchase. The USDA loan program, for example, requires no down payment. With an FHA loan, a buyer can put down as little as 3.5% on their home. A VA loan requires no down payment, too. A conventional loan, which is the most typical type of loan, is where you want to consider how much money to put down on your new home purchase.
Conventional loans
Most commonly, buyers put down 10% on a new home with a conventional loan. This is ideal, as it covers a reasonable portion of the home loan. However, the more money you put down, the less you will pay each month on your mortgage payment. You can calculate how much your monthly mortgage payment will vary based on your down payment using this calculator.
Interest
Interest rates are an important thing to consider when purchasing a home. This is true for numerous reasons, but interest rates can have an effect on your down payment amount. The more money you put toward your down payment, the less money you pay toward your mortgage each month. If interest rates are higher or not ideal, contributing more toward your down payment could lower your monthly mortgage payment.
The amount that you put down on a home can affect many things, especially your monthly mortgage payment. It is important to consider things like the type of loan you are receiving, as well as the current interest rates, when you decide how much money to put down on your home purchase. Contact your local lender to learn more about loan programs and how much money to put down toward a new home.
