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What Are My Down Payment Options for New Homes?

What Are My Down Payment Options for New Homes?

Buying a new home is very exciting. Besides selecting the perfect neighborhood and making sure you get the best house for you and your family, there are lots of financial things to take into consideration. One of the most important things to plan for is your down payment. Home loans come in all shapes and sizes. Let’s go over the most common top three options borrowers choose.

Down Payment Option One – 3.5%

One of the least expensive ways to get into a new home is by taking advantage of an FHA (Federal Housing Administration) government loan. This type of mortgage only requires that you put 3.5% down. On a $250,000, that’s only $8,750, which makes getting into a home extremely affordable, especially for first-time homebuyers. One thing to keep in mind with an FHA loan is that you will have to pay monthly private mortgage insurance for the life of the loan. Private mortgage insurance (PMI) protects the lender in case of default – it’s not the same as homeowner’s insurance. This type of insurance is required when you put down less than 20%. But, even with the extra insurance, an FHA loan is still an excellent choice.

Here are the three top reasons so many borrowers choose this loan:

1. The interest rates on FHA loans are some of the lowest.

2. Your credit doesn’t have to be perfect, and you can get a loan if your score is in the low 600s.

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