{"id":9139,"date":"2019-03-10T12:30:00","date_gmt":"2019-03-10T12:30:00","guid":{"rendered":"https:\/\/amazingproperty.com.ng\/blog\/down-payment-dilemma-how-do-you-know-how-much-to-put-down-on-a-home\/"},"modified":"2022-01-11T16:05:54","modified_gmt":"2022-01-11T16:05:54","slug":"down-payment-dilemma-how-do-you-know-how-much-to-put-down-on-a-home","status":"publish","type":"post","link":"https:\/\/amazingproperty.com.ng\/blog\/down-payment-dilemma-how-do-you-know-how-much-to-put-down-on-a-home\/","title":{"rendered":"Down Payment Dilemma: How Do You Know How Much To Put Down On A Home?"},"content":{"rendered":"

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You’d be a homeowner right now if it weren’t for one thing: the down payment<\/strong>. Right? Even for those who have decent credit and make good money, the down payment is often the great homeownership killer.<\/p>\n

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down payment<\/figcaption><\/figure>\n<\/div>\n
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For many others, who do have enough money set aside to make a substantial down payment<\/strong>, the question is: how much? Conventional wisdom\u2014not to mention most of the banks and a good portion of homebuying and financial experts\u2014will tell you that 20 percent is the standard bearer when it comes to down payments<\/strong>. But is it really necessary to put 20 percent down?<\/p>\n

The short answer is: no.<\/p>\n

Now for the long answer.<\/p>\n

“Raising a 20 percent down payment<\/strong> isn’t an easy thing to do. Fortunately, you don’t have to. “It’s a myth that all homebuyers must have a 20 percent down payment<\/strong> to buy a home,” says Nancy Herrera-Siples, a Riverside, Calif., branch manager at Primary Residential Mortgage<\/a> on U.S. News. “So why do you constantly hear that you need to put 20 percent down? Because if you don’t, it usually means you’ll have to shell out money for either private mortgage insurance<\/a> or government insurance, which is usually financed by the Federal Housing<\/a> Administration (FHA).<\/p>\n

And there’s another rub for those who are already struggling to come up with the minimum down payment<\/strong>: that extra couple of hundred dollars per month feels like a penalty. It’s not, of course\u2014”Mortgage insurance protects the lender in case you can’t make your payments and the house is foreclosed<\/a> on,” said U.S. News\u2014but that money can make a significant difference for those who are stretching to buy a home.<\/p>\n

Still, when your only option to buy is a low down payment<\/strong>, which can mean an FHA loan<\/a> or one of the new low down payment<\/strong> loans<\/a> from Freddie Mac and Fannie Mae\u2014”At the end of 2014, the two government-backed companies announced plans to slash down payments<\/strong> from 5% to 3%,” said CNN\u2014PMI might literally be a small price to pay. Especially if swelling rents are making homeownership look more and more promising. Remember that PMI does go away eventually when your loan balance is 80 percent or less of the home’s value. If you’re in an area where homes are rising in value, this could happen sooner than you think.<\/p>\n

Still confused about the ins and outs of down payments<\/strong>? Here are a few reasons to go high\u2026or low.<\/p>\n

When to make a substantial down payment<\/strong><\/h4>\n