How much should you spend on a down payment on a house?

by Denise Mason 06/26/2024

A major step in the homebuying process is paying the down payment on a house. Deciding how much to put down can be tricky, however, and affects both your mortgage terms and buying experience in a number of ways.

To help you make the best decision, here are some key facts about down payments buyers should know:

Minimum down payment on a house

The required minimum down payment to buy a house depends upon the type of loan you apply for. Conventional loans, while not backed by the government, follow the same regulations as government loans and typically require a minimum of 3% down payment.

FHA loans offered by the Federal housing administration require as little as 3.5% with a solid credit score.

Loans guaranteed by the U.S. Department of Veterans Affairs generally don't require a down payment at all. However, these loans have specific eligibility requirements and can have higher interest rates.

How your down payment affects your offers

When market conditions are competitive, sellers will receive multiple offers for the same property. A larger down payment can give you a competitive edge.

However, it's important to remember closing costs when budgeting for your home purchase. Be careful of opting for a down payment that will leave you unable to afford the other expenses associated with homebuying.

The ‘right' down payment amount is different for everyone

The amount of down payment to offer is different for every situation. With a lower down payment, you may be required to pay private mortgage insurance, increasing your long-term costs. Lower down payments can also mean larger interest rates, which can add up considerably down the road.

Down payment assistance programs are available for first time buyers who need extra help to afford cash up front. Keep this and other options in mind when planning for your home purchase to ensure the best possible financial outcome.

About the Author
Author

Denise Mason

Hi! I'm Denise Mason. WELCOME to my Website! Being a full-time REALTOR® gives me the opportunity to assist in achieving your wants, desires, needs, and priorities in selling or finding a home. My goal is to take care of my real estate clients by providing an exceptional, no drama experience that you not only deserve but should demand in the hectic and competitive marketplace of today. I work closely with you throughout your entire real estate transaction. I work to be your family REALTOR® for life. Success begins and ends with good communication. I love what I do and do what I love! I am positive, enthusiastic and truly enjoy people and the real estate business. My commitment to you, my client extends far beyond a single transaction. My goal is to communicate, educate and exceed expectations! As the daughter, wife, and mother of active duty and retired service members, I've had numerous relocation experiences; renting, buying and selling a home. I grew up in Arlington County, VA and lived there for more than 20 years. Upon my husband's retirement from the Army we could think of no better place to call home than Virginia, the place of our childhood. I have been a Prince William County resident since 1997. We have raised and educated three children in the Prince William County School system. My family is my pride and priority which makes me no different than you or any other individual who wants a safe and comfortable environment for yourself, family and friends. I look forward to helping you achieve your real estate goals. Call me at 703-283-0969 or email me so we can meet over tea or coffee & I can get to work for you!