How much of a down payment do you need to buy a home?
A common misconception about buying property is that you must come up with a large down payment of 20% or more to be approved for a mortgage. In fact, there are multiple programs available to a buyer to assist them in the purchase of a home.
We recommend developing a relationship with a local lender who has an interest in helping you accomplish your goal and who you feel comfortable working with. The best place to start is with your current bank. A good lender will provide you with several loan options and may be able to introduce you to down payment assistance programs through the Iowa Finance Authority, for instance.
A lender will help you figure out what you can afford and simplify the process. Just because you don’t have a large down payment does not necessarily disqualify you from buying. Some banks, in fact, offer 100% financing that may even include closing costs but will be dependent on factors such as your credit score and income. But remember, the more you borrow, the more interest you pay over the course of the loan.
Here’s what a lender might consider:
- Your credit score: have you defaulted before? Don’t sweat a less than perfect score. Generally, lenders are looking at your credit score as one piece of the whole application.
- Income and employment history
- Current loans
- Down payment
To launch the process of buying a home, contact Westwinds Real Estate and we can help you define your goal and assist you with finding the right lender.