Buying a home is a significant investment, and one of the largest expenses is the down payment. However, it’s a common misconception that you must make a 20% down payment on a mortgage. While putting 20% down will allow you to avoid paying for private mortgage insurance, lenders seldom ask for that large a payment.

In this blog, the dedicated experts at HomeSpring Mortgage discuss down payments in nature, dispel common myths, and provide tips for saving towards your down payment.

The Truth About Down Payments

If you’ve got a solid credit score and manageable debts, a lender may allow you to borrow more and put down less. Additionally, different types of home loans have different down payment requirements. Conventional loans, which adhere to conforming loan standards, can require as low as 3% down. The Federal Housing Administration backs FHA loans and requires as little as 3.5% down.

VA loans let borrowers skip the down payment and are limited to current and former U.S. service members and qualifying spouses. Finally, USDA loans, backed by the U.S. Department of Agriculture, usually do not require a down payment.

Tips for Saving Toward a Down Payment

Here are some top tips from our mortgage lenders on saving for a down payment on a home.

  1. Determine how much you need to save: The first step is to determine how much you need to save. This will depend on the type of loan you’re applying for and the price of the home you desire. Once you know how much you need to save, you can work towards that goal.
  2. Create a budget: Determine how much you can save each month and stick to it. You can also consider cutting back on expenses, such as dining out or entertainment, to free up more money.
  3. Open a dedicated savings account: Open a separate account specifically for your down payment savings to help you keep track of your progress and avoid dipping into your savings.
  4. Consider additional sources of income: You can also consider taking on a side job or selling unwanted items to generate additional income that can be put towards your down payment savings.
  5. Look for down payment assistance programs: Some states and local governments offer down payment assistance programs to help you cover your down payment and closing costs. Check with the South Carolina Housing Authority to see if you qualify.

Consider Makes Us Your Mortgage Lender in Hollywood, SC

Saving for a down payment on a home can seem daunting, but it’s essential to remember that every little bit counts. By following these tips, you can start working towards your goal of homeownership. Remember to stay focused and disciplined, and you’ll be well on your way to achieving your dream of owning a home. Contact HomeSpring Mortgage in Hollywood, South Carolina, today to learn more.