Downpayment on a home in Northern Virginia

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Tom Vesolich
RE/MAX Allegiance
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Home Downpayment

How much cash you have available and how much you want to apply to the downpayment
The type of loan you choose and the minimum downpayment requirements for that type of loan

The downpayment is normally some percentage requirement of the sales price. As an example if a home cost $100,000 and there was a requirement for a 5% downpayment then you would need to have $5000 to apply towards the downpayment. And almost always these must be your funds…already in your bank account.

The downpayment is what the buyer pays in cash and does not finance with a mortgage. Your down payment will reduce the amount you'll need to borrow. So, the more cash you put down, the smaller the size of your loan, and the smaller the amount of your mortgage payments. Generally lenders often view mortgages with larger down payments as more secure because you have more of your own money invested in the property.

The government offers loan programs which provide you the ability to have the lowest amount possible for a downpayment. With a VA loan you can buy a home with no money down. FHA offers loan which will enable you to have as little as around 3% of the sales price for a home.

Next comes what is called a Community Home Buyer Program established by Fannie Mae (FNMA). There are certain restrictions associated with this loan program and the downpayment requirement is 5%. But you are able to have only 3% of your own funds and there are options as to how you can use or obtain the additional required 2%. Look elsewhere in the financing section for more information on the Community Homer Buyer Program.

Finally there is the conventional loan which requires a minimum of 5% downpayment. However there is one consideration to be made here with conventional loans. Whenever you put down less than 20% you will have another charge for your monthly mortgage payment and that is for private mortgage insurance. This is the equivalent of adding almost an additional half percent to the interest rate in terms of how the monthly mortgage rate increases. There are programs to diminish this effect and we can review those.

Many lenders are now offering no money down loans. Depending on what your financial situation is, these may bear considering. Be sure to ask about them.