How much down payment is needed to buy a home?

One of the biggest misconception among first time home buyers is the idea that they have to have 10% or 20% for the down payment of a home. That maybe the case for secondary homes, jumbo loans, non-conforming loans, construction loans, and investment properties. HOWEVER, if you are a first time home buyer there are governmental loans, AKA conforming loans, that only require 3.5%, 5%, or even NO down payment!

A conforming loan is a mortgage that meets the dollar limits set by the Federal Housing Finance Agency (FHFA) and the funding criteria of Freddie Mac and Fannie Mae. The 2023 conforming loan* limit for most counties in Colorado was set at $726,200. Examples of conforming loans are:

  • VA If you have served in the military in this country, you likely can qualify for VA loans and those require no down payment. You basically can finance 100% of the total cost of the home.

  • FHA and Conventional - Most of the time these loans only require between 3.5% and 5% down payment.

  • USDA loans are only available for properties in rural and developing areas. No down payment is typically required and your lender or realtor can give you a map of USDA approved areas. If you like to live in the mountains or off-grid this loan maybe ideal for you!

A non-conforming loan is simply any mortgage that doesn't conform to the requirements set forth by Fannie Mae and Freddie Mac. Examples of non-conforming loans are:

  • Jumbo loans designed for homes priced over $726,200 and in this case you will have to put a higher percentage of down payment. Let’s be real though, most first time home buyers don’t start at that price point.

  • Private financing is another option and this too require a higher percentage of down payment. A professional mortgage lender can give you options unique to your own case. There are closing costs on top of the down payment, but I can negotiate having the sellers pay for your closing costs :-D

    I have worked with some of the best mortgage lenders in the industry and would be happy to refer you to a trusted professional that can guide you cost-free. So don’t wait, get informed so you too can make an educated decision. If you have any questions, I’m just a click away!

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