How Much Down Payment Do You Need?
Evan, who hopes to buy a home one day, is getting conflicting information about how much of a down payment he'll need. Whether or not he has enough money might have an effect on when he'll be ready to purchase a home. He's heard that down payments can range from 5 percent to 20 percent. The more he puts down on say, a $250,000 loan, the lower his payments would be. But if cash flow is low, he could do a small, 3.5 percent down payment.
The amount of down payment necessary when buying a home depends on the type of loan Evan's applying for, such as a government loan like an FHA or VA loan, or a conforming loan from a private institution. In the case of non-conforming loans, which are typically "jumbo loans", the down payment requirement can be 20 percent.
Evan asked the What Works Now experts to walk him through some of the different loans available right now and how much he'd need in savings before making an offer on his dream home.
