For a first-time homebuyer, a mortgage down payment can seem like the most difficult part of purchasing a home. Many first-time homebuyers have fewer savings to put toward a down payment or have debt from student loans or credit cards. As your mortgage planner, I am here to help you through every step of purchasing your first home. I hope to make saving for and understanding down payments easier for you.

Let’s start with the basics: What is a down payment? If you are unable to pay for a house in cash, a mortgage company provides financing in the form of money you borrow from a lender. The down payment is the initial payment made on the property, while the balance of the home price is financed. For example, if you purchase a home for $100,000 and borrow $90,000 (90%), you would put a $10,000 (10%) down payment on the house.

As a homebuyer, the size of your down payment is up to you. Many programs that allow for a lower down payment — or, in some cases, no down payment or down payment assistance — are available to first-time homebuyers. Additionally, you can use “gifted funds” for your down payment. Gifted funds are funds given to you by your parents or another eligible relative. I am happy to tell you more about the guidelines for this type of down payment.

Depending on which loan program you choose, if your down payment for a home is less than 20%, many lenders require that you purchase private mortgage insurance, or, PMI. As your mortgage planner, I can be a valuable resource for analyzing your finances and helping you decide how much home you can afford as well as how much money you should put down.

I would love to talk with you soon about purchasing your first home. Call me today to learn more.