There is a common misconception about down payments that stops potential home buyers before they even begin the home buying process. That misconception is that you need to put 20% down in order to buy a home. We aren’t saying if you are able to put 20% down that you shouldn’t, but for those who can’t afford that, there are other options!
What is a Common Down Payment
So, if you don’t need to put 20% down, you may be wondering what is common for a down payment. According to the National Association of Realtors, the median down payment is 13% for all homebuyers while the median down payment for first-time buyers is 7%. There are various options for mortgages that will give you a better picture of what is required for a down payment. For example, FHA loans require as little as 3.5% down while VA loans, which are available to military service members, normally don’t require a down payment.
Weighing Your Options
As with anything, there are pros and cons to different levels of down payment. If you decide you want to wait until you can afford a 20% down payment you will have the benefit of avoiding mortgage insurance, having more equity in your home from the start and a lower mortgage payment. The biggest con in this scenario is it will take time to save that type of cash depending on your financial situation. If you decide to put less down, you’ll be able to start your home search sooner as you won’t need as much cash upfront when buying your home. However, you may be looking at a higher interest rate and you’ll have to pay mortgage insurance until you reach 20% equity in your home.
How to Know What Your Mortgage Will Look Like
After learning about your options, you may be wondering, “what option is right for me?” If you’re wondering what your mortgage may look like, try out our payment calculator that will estimate your monthly mortgage payment! This can help give you a better picture of what you can afford.
Once you’re ready to start the home buying process, reach out to a First Weber realtor! We have local real estate experts throughout the state of Wisconsin who can help you with your real estate needs.
Founded in 1971, First Weber Realtors® is a part of HomeServices of America, the nation’s largest provider of total home services. With 60 offices and more than 1,400 real estate professionals, First Weber is consistently number one in Wisconsin for unit sales and real estate sales volume. You can start searching for Wisconsin real estate and Wisconsin real estate agents at firstweber.com