Buying your first home is an incredibly exciting time in life, but also one full of questions! At Haitian Realty, our goal is to make real estate feel attainable, and one of the first steps toward buying your first home is knowing your budget. Here are some things to keep in mind when deciding how much you need for a first-time home buyer down payment.

Different Downpayment Options

Want to know one of the biggest first-time home buyer down payment myths? You need to come up with a 20% payment to buy real estate. False! While this may be true with some conventional loans, it’s not always the case. Depending on your financial situation, employment status, and whether you’ve served in the US military, your down payment could actually be much lower.

Here are some common downpayment costs:

• Conventional Loans: These types of loans are offered by financial institutions like banks and typically cover 3% to 20%.
• FHA Loans: If your debt-to-income ratio is below 43%, you’re fully employed, and you have a credit score over 500, you may only need between 3.5% and 5% of the home cost with an FHA loan.
• NHF Loans: Middle-class buyers with higher credit scores (greater than 640) may qualify for the National Home Buyer’s Fund, program. This downpayment assistance is available for home buyers with a 45% debt-to-income ratio.
• VA Loans: Veterans and active-duty service members with full entitlement may qualify to buy a home without putting a down payment down! And you don’t need Private Mortgage Insurance (PMI) either.

Average Cost of a Home

Depending on where you live, the average cost of a home in the USA can vary widely. However, the median average price in the country is just over $462,000. This means, for a conventional loan, you can expect to put a down payment of anywhere from around $14,000 to $92,000.

Closing Costs: Money You’ll Need Besides the Loan

When you’re trying to figure out how much you need for a first-time home buyer down payment, you also need to factor in the closing costs. In general, these add up to somewhere between 2% and 6% of the cost of the home. The fees that closing costs include are:

• Underwriting fees.
• Appraisal fees.
• Credit report fees.
• Attorney fees.

There are sometimes other costs too, and Haitian Realty can help identify any upfront costs, so it’s not a surprise when you buy your first home.

Learn if You Can Afford a Home

Understanding your budget and how much your first home will cost can give you a better idea about whether or not you can afford a first-time home buyer down payment. If you have any questions, Haitian Realty is here to help you find out if now is the time to purchase your first home!