When your saving for a down payment to buy a house it is important that you save enough money to meet the minimums required for the type of loan you are applying for. In addition to the down payment you will also need put away some extra money to cover your closing costs, and moving expenses. The standard amount for a down payment is 20%. Don't worry, if you don't have 20% saved for a down payment you may still be eligible for a home loan with mortgage insurance. Use the example below to give you an idea on the minimum amount of down payment required in order to finance the purchase of a home.
Example down payment scenario for a $200,000 Loan:
You will need the following down payment (this does not include closing costs) for the below loan products.
FHA loan – 3.5% (Minimum) of $200,000 = $7,000 down payment. PMI Required.
Conventional loan - 5% (Minimum) of $200,000 = $10,000 down payment. PMI Required
Conventional loan – 20% of $200,000 = $40,000 down payment. No PMI Required
VA loan – 0% no money down with VA approval. No PMI Required.
USDA loan – 0% no money down with USDA approval. No PMI Required.
Your down payment needs to come from verifiable sources:
Acceptable forms of documentation can be monthly statements from banks, credit unions, investment companies, stocks, life insurance, etc.
Physical cash on hand for down payment or closing costs is not allowed. Cash should be deposited 6 months in advance of applying for a loan if you intend to use this form of down payment.
Documented gifts of down payment from family can be used as an acceptable source of down payment on FHA loans. Some loan types do not allow "gift" funds.
401K accounts are an acceptable source for down payments. Your 401k provider may limit the amount of money that you are able to withdraw without fees or penalties.
Are you ready to move forward with a purchase or refinance? Please give us a call at 888-810-1459 and let us help you secure financing for the purchase of a new home or save you money on the refinance of your existing home. Be sure to ask your loan officer about our closing costs incentives and our low rate guarantee!
Disclaimer: The information contained in this article has been prepared by an independent third party and is distributed to consumers for educational purposes only. The information is considered reliable but not guaranteed to be accurate. The opinions expressed in this article do not represent the opinions of Skyline Home Loans. Please consult with a licensed loan officer for expert advice regarding financing or refinancing a home.