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Exploring Your Down Payment Options

Embarking on the path to homeownership is an exciting journey filled with decisions, and one of the most significant is determining your down payment. Your down payment not only impacts your mortgage terms but also influences your financial stability and future homeownership experience. While the traditional 20% down payment is often ideal, there’s a spectrum of options tailored to suit diverse financial circumstances and aspirations.

Traditional 20% Down Payment

A 20% down payment is often considered the gold standard in real estate transactions. With this option, you borrow 80% of the home’s purchase price, reducing the amount of your mortgage loan. A higher down payment typically results in lower monthly payments, reduced interest costs over the life of the loan, and sometimes exemption from private mortgage insurance.

First-Time Homebuyers Minimum Down Payment

Qualified first-time homebuyers can access loan programs requiring as little as 3% down. These programs are designed to make homeownership more accessible to those entering the market for the first time. While their initial cost is attractive, it often comes with the requirement of private mortgage insurance and potentially higher monthly mortgage payments.

Non-First-Time Homebuyer’s Minimum Down Payment

For those who have previously owned a home, the minimum down payment required typically starts at 5%. This option still provides a relatively low entry point into homeownership, although similar to the first-time homebuyer’s minimum, it will require private mortgage insurance until the loan-to-value ratio reaches 80%.

Downpayment Assistance

In the spring, many grant programs become available to assist with down payments. At First State, we partner with FHLBank to offer the Homeownership Set-Aside Program to first-time homebuyers and the Homeownership Possibilities Expanded Program to those that do not traditionally qualify for support but still need assistance with the downpayment. Applications for these grants typically open in early March and are on a first-come, first-served basis.

Selecting the right mortgage down payment option requires careful consideration of your financial standing, homeownership objectives, and eligibility for various loan programs. Whether you opt for the traditional 20% down payment, explore lower down payment options, or leverage down payment assistance, strategic planning is key. By partnering with a knowledgeable mortgage lender, you can navigate the maze of downpayment options and embark on your homeownership journey with confidence and clarity.

Our experienced Mortgage Team at First State is dedicated to helping you find the plan that best meets your needs. Click here to learn more or apply online.