Buying a home is a major financial decision — one of the largest you’ll likely make in your lifetime. A significant part of this process is saving up for a down payment. Many homebuyers will work hard and save for many years to build up their savings for this important purchase. But what amount is right for you? That all depends on the cost of the home you’re looking to buy and what your personal financial situation and goals are.
The traditional down payment amount is 20%. For example, if the home you’re looking to purchase is $200,000, the down payment will be $40,000. Having this amount will save you from paying mortgage insurance, which is a fee that’s added to your monthly payments that protects lenders in case you’re unable to pay the mortgage. But what if you want to buy a home and don’t have the full 20% saved?
Options are available:
The U.S. Government offers a variety of home purchase programs that help make homeownership possible for more people. These programs are offered through agencies such as the Federal Housing Administration (FHA), the U.S. Department of Agriculture (USDA), and the U.S. Department of Veterans Affairs (VA). Each of these agencies offers specific loan programs with different down payment requirements.