Home Financing - Mortgage Down Payment Guidelines

Down Payment Information

When preparing to buy a home, the first thing that you as a potential home buyer should do is to look at your savings. Why? Because determining how much money you have available for down payment and closing costs affects almost every aspect of buying a home.

This would include how you write your purchase offer, the loan programs you qualify for, and shopping for interest rates. If you only have enough money available for a minimum down payment, your choices of loan program will be limited to only a few types of mortgages. If this is the case don't despair for there are still plenty of mortgage programs available to you.

Another situation is when you have enough for the down payment, but need the lender or seller to cover all or part of your closing costs. This also limits your options. If you borrow all or a portion of the down payment from your 401K or retirement plan, different loan programs have different rules on how you qualify.

If you are fortunate to have enough for a large down payment, then you have many more choices. These choices might include such varied programs as conventional fixed rate loans, adjustable rate mortgages, buydowns, VA, FHA, graduated payment mortgages and all the varieties of each.

Your down payment also affects your ability to qualify for your loan. When you make a small down payment, lenders are fairly strict about having you conform to their underwriting guidelines. If you are able to make a larger down payment, they will tend to make allowances or exceptions to the rules.