All About Down Payments

When we talk with our clients, one of the biggest topics that people ask about is down payments. Many borrowers are uncertain about how much they need, whether they should put down more than the minimum, or whether they can buy a home without a large traditional down payment. Fortunately, the mortgage experts at Crystal Clear Mortgage know all about your options and are happy to go over your unique circumstances with you to match you to the right loan, and down payment, for you. But if you’re looking for the low-down on down payments, we’ve gathered up what you need to know.

What is a down payment?

A down payment is simply the money you’ll pay up front at the mortgage closing. It’s often discussed as a percentage of the purchase price.

How much do I need for a down payment?

Here’s where the answer gets tricky. It’s a mistake to think that all borrowers must make a large down payment, or even that a conventional mortgage always requires one. Homebuyers may be able to get a conventional mortgage with a smaller down payment, with the right experts by their sides.

What kinds of down payments are required for a conventional loan?

How much of a down payment is required depends on the purpose of your property purchase and on your credit score. A primary residence may call for less than a secondary residence, and an investment property, which has stricter lending requirements, calls for more. Read more about conventional home loans.

What about an FHA loan?

An FHA loan may allow a smaller down payment than a conventional loan, depending on your credit score. You can’t buy a secondary residence or investment property with an FHA loan.

How much is required for a VA loan?

A VA loan has its own down payment rules, and there are specific qualifications you have to meet. Call our experts to learn more about VA home loan benefits. While you can use a VA loan to purchase a primary residence, you can’t use a VA loan to purchase a secondary residence or investment property.

How much do I pay down with a USDA loan?

USDA loans have their own down payment rules as well. You’ll need to meet certain income requirements and the home you’re buying will need to meet USDA loan qualifications, such as being in an approved rural or suburban area.

What should I consider when deciding how much of a down payment to make?

Generally speaking, you’ll need to think about things like how your down payment will affect your monthly payment and whether you want to avoid paying private mortgage insurance, which is typically paid on loans with a smaller down payment. Your Crystal Clear Mortgage loan officer can walk you through all of the considerations and help you reach a decision that’s right for you.