Mortgage Down Payment Basics

Home Mortgage Down Payment Basics

As always, be sure to consult with your Fairway loan officer to discuss your down payment on a house!

What is a down payment?

A down payment is a percentage of the total cost of the home you are purchasing that is paid to the seller, with the balance paid through your mortgage. A down payment typically ranges from 3-20 percent of the total home price, though this will vary depending upon the type of loan you qualify for based on your credit history, the type of home, and reason for buying.

How much down payment do you need to buy a home?

Fairway Independent Mortgage Corporation offers many flexible down payment options to fit our client’s unique needs! With our various loan products available, qualified borrowers can pay as little as 0-3% down on their home purchase. Of course, the higher the down payment, the lower your monthly mortgage payment will be. A down payment less than 20% typically requires the borrower to pay private mortgage insurance.

What is Private Mortgage Insurance?

Private Mortgage Insurance (PMI) is provided through a private mortgage insurance company to protect lenders against loss if a borrower defaults. Most lenders generally require MI for a loan with a loan-to-value (LTV) percentage in excess of 80 percent.

Where can the Funds for a Down Payment come from?

The funds used for a down payment can come from your savings, the proceeds of another home sale, or gifts or grants from family, employers or non-profits. Use our down payment mortgage calculator to check out your low down payment mortgage options! To learn more about down payment assistance contact a Fairway Loan Officer directly.

Is a down payment the same thing as cash to close?

A down payment is the money used to put down on the property being purchased. Cash to close is the total amount of money a buyer will need to bring to their closing. In addition to the down payment, this includes settlement costs and lenders fees, with the deduction of any earnest money deposits made throughout the transaction. Buyers can find how much cash is needed to close on Page 3 of their Closing Disclosure.

How can I access my credit report?

You can access your FREE credit report once per year at www.annualcreditreport.com.