Welcome to Joe Knows Mortgages MINUTE, where we answer your mortgage questions.
On this week’s Joe Knows Mortgages MINUTE, we answer the question:
What is the minimum down payment on a Conventional Loan?
It has been recommended that the buyer shouldn’t purchase a home unless they are able to put 20% down. By putting 20% down, the buyer is able to avoid Mortgage Insurance. Avoiding monthly Mortgage Insurance premiums is nice; however, if putting down 20% will deplete your savings and leave you with no financial cushion, it’s probably not in your best interest.
Fortunately, when it comes to the size of a down payment, there are options to best suit the needs of the borrower. Although a typical buyer puts down 5-10%, there are 3% Down Conventional Loans for qualified borrowers.
By putting down less than 20% on a Conventional Loan, you will likely pay Mortgage Insurance; however, once you’ve built 20% equity in your home (making the amount you owe on your mortgage 80% or less of its value) there are ways to cancel your Mortgage Insurance. The ability to cancel your monthly Mortgage Insurance is a benefit that you get with a Conventional Loan that you don’t get with an FHA Loan; With an FHA loan, you pay Mortgage Insurance premiums for the life of the loan.
We recommend that you carefully evaluate your finances to determine how much you can afford and talk to your lender or housing professional about what makes the most sense for you and your particular situation.
Do you have a home loan related question that you want answered? We want to hear from you!
All you have to do is submit your question and it may be chosen for our next “Joe Knows Mortgages MINUTE” which we showcase on Mondays.
All questions will be replied to, so please submit your question below.