Home-Buying Basics: Down Payment Size

The down payment on a home affects many things — what home you can afford, loan size, financing terms and more.  Getting some sense of the down payment you can afford can be difficult; people are quick to share advice from their experience, but conditions may have changed.

In general, the higher the % of the purchase that you can cover in the down payment, the better the loan terms as a whole are likely to be.

5% of the home is currently the minimum down-payment amount.  Keep in mind that any amount under 20% will generally require a mortgage insurance policy, which does increase borrowing costs.

Keep in mind that the down payment is not the only sizable payment involved in buying a home.  You will also need cash for closing expenses, moving, decorating, furnishing and possibly repairs.

Check your credit history when you’re sizing up down payment and loans; it’s also a vital part of the equation.

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