How much of a down payment do I need?
A down payment is the money you pay at closing to decrease the total size of the loan. Having a down payment of 20% or more helps you get a lower interest rate and avoid paying private mortgage insurance. But you don’t have to put 20% down to buy a house. There are a options of low down payment options available for home buyers:
- Fixed–rate conventional loans offer down payments that are typically a minimum of 5%
- VA Loans do not require a down payment
- FHA loans have a minimum down payment of 3.5% which all of it can be an acceptable gift.
Depending on if you plan on living in the property‚ your down payment can vary.
What’s included in my monthly payment?
A monthly mortgage payment includes your principal‚ interest‚ taxes and insurance. The principal portion goes toward paying off the total amount you’ve borrowed. The interest is a percentage of the amount borrowed that you pay to the lender.
For many homeowners‚ the monthly mortgage payment includes more than just principal and interest. It can also include property taxes and homeowners insurance premiums if you have an escrow account with your loan. An escrow account allows you to pay for your taxes and insurance premiums as part of your monthly mortgage payment.
If you buy a home in a neighborhood includes a homeowner’s association (HOA)‚ you will want to add your HOA fees into your monthly payment budget. Usually‚ your HOA fees probably will not be included in your mortgage payment.
What factors determine my interest rate?
There are factors that may affect your mortgage rate. Here are a few:
- Type of loan
- Credit history
- Loan amount
- Down payment amount