Do I need 20% Down to Buy a House?

REAL ESTATE MYTH:  

I need to save 20% for a down payment before I can buy a house…

I can’t tell you how many times people have said to me “I’m thinking about buying a home in the near future but I’m still saving up that 20% down payment I need to make it happen.”  Truth be told, I thought the same thing when my husband and I were looking for our first home a few years ago – of course this was prior to my becoming a Realtor.  Now I know better! 

I mean, think about it… If someone was looking to buy a home for $200,000, and they needed to have a 20% down payment, that’s $40,000 they would have to have saved up prior to buying their house! Add in the money needed to cover closing costs and you would have a lot of people who were unable to ever buy a home! The truth is you don’t need to have a 20% down payment.  Now of course this will depend on your specific loan so talk to a lender for exact numbers but generally speaking…

If you have a FHA loan you only need a minimum of 3.5% down -- So that $200,000 home you were looking at? You would only need $7,000 for your down payment!

You’d need to have slightly more on hand for a Conventional loan as they require a minimum of 5% down -- So you would need $10,000 on hand for that $200,000 home!

USDA & VA loans require absolutely no money down so if you qualify for them congratulations!  So if you are one of those people who were saving up that 20%, you may already have enough saved!  In which case, give me a call and let me help you start your house hunt!

My thanks to Brian Vincent and the fine folks over at University Lending for allowing me to pick their brains before writing this blog! 

As always, if you or someone you know is looking to buy or sell a home in Tallahassee or anywhere else– Call me at (850) 294-7058 or shoot me an e-mail at CorinneJohnston@KW.com I’d love to help you!

Cute kid pic for the week.