Many buyers think they need to save for a home, then are surprised to find they already have the resources to make the purchase. Below are some ideas to help you feel confident that you are ready.
How much do I need for my down payment?
There is no precise formula for down payments. There are many variables, including the different requirements for different types of loans.
To help you out, we created this simple worksheet to understand your three biggest expenses, including the down payment. You can search for a home with confidence once you’ve estimated how much money you will need up front.
If you’re close to having enough, it is best to start your search. You can save money while you search for a home, and as your deal is coming together.
What funds can I use for my down payment?
You can’t use someone else’s money for your down payment. Before the loan closes, you will have to prove the money is yours.
This money needs to be “seasoned,” meaning it has been in your bank account for a few months. There are rules about using money from the sale of stock, drawing funds from a retirement account, and many others.
Buyers often find these rules confusing and frustrating, but we’re here to help. Use this worksheet to find out how much of your assets are technically available for a down payment.
We are interested in helping you succeed. If you have questions about which funds can be used for a down payment, please reach out.
How much can I afford to pay per month?
Before you think of how much to spend on a home, get pre-approved. This tells you how much you can borrow for a home purchase. Once you have this number and you know how much you can pay up front, it is easy to estimate your monthly payment.
One of the biggest mistakes we see buyers making is waiting to pre-approve. We recommend you make pre-approval one of the first things you do.
Should I make a larger down payment?
There are advantages to putting down more than the minimum.
When a down payment is less than 20%, mortgage insurance can add around $300 to your monthly payment.
If you have the 20%, you will probably want to use it. A larger down payment will decrease your loan amount and probably your interest rate.
Using a renovation loan
There are many types of loans. They all have their own rules. Some of these loans offer great opportunities for veterans, families with lower income, investors, small business owners and others.
Historic homes often need repairs. Using a renovation loan, you can borrow the money for the repairs and the purchase with one loan. Most renovation loans only require a 3.5% down payment.
This is a way to purchase a property with a problem and create a solution that builds equity. Financing repairs will increase your down payment a little bit, but it is a great way to reduce the total amount you need for the home.
Many agents and sellers shy away from renovation lending because these deals often fail. If you need this type of loan we can guide you through the process.
We have a team of lenders, contractors and consultants, and we have the experience to get your purchase done.
Compare the homes you like. Download this simple organizer.
Identify the home you’re searching for. Use this worksheet.
While you find your target, Get pre-approved.
To get an idea of what’s available, Schedule a day to look at homes.