See how much you need to save a downpayment
A down payment is the money you pay toward the cost of the house. You borrow the rest from the bank as a mortgage.
- Required down payments could start as low as 5% of the purchase price of the home. A loan from the Federal Housing Administration (FHA), could require just 3.5% and a loan from the Veterans Administration (VA) may not require any money down.
- Private mortgage insurance (PMI) is required when you put down less than 20% using some loans programs. This will be added to your monthly mortgage expense but can be eliminated once your loan balance reaches 80% of the original loan amount. Consult your lender for loan options and down payment requirements.
Three common ways of funding a down payment:
Buyers often save for years by reducing expenses. Many postpone vacations and major purchases. Some even take a second job in order to build their nest egg.
A family member may be willing to give you a one-time gift that will enable you to get into the house. If you accept a cash gift, you'll need to get it clearly in writing that the family member is making the gift outright, and has no financial interest in or obligation toward the property. A bank will not accept it as part of your down payment if your "gift" from your parents is really a loan that you will be required to repay.
Down payment assistance
State and local governments offer down payment assistance to low- and moderate-income homebuyers. Many nonprofit organizations also offer down payment assistance. Contact your lender or your state housing authority for information on these programs.