Finances usually play a significant role toward the purchase of any big-ticket item. Buying a home might top your list of purchases that requires a six-figure loan. For more than a dozen years, Perennial Funding has offered home financing solutions to buyers along the East Coast.
As a prospective home buyer, it is important to know how much money is required toward the down payment for a home. However, the specific amount of money that you will need largely depends on the cost of the home, your overall financial standing and your credit history.
Conventional financing programs that require a five-percent down payment may be an option if you meet the credit requirements. Although, to avoid monthly mortgage insurance premiums, you would need to make a down payment that equals 20 percent of the property’s sales price.
Government-backed loans generally require a lower down payment to finance properties that comply with local lending limits. Loans that are underwritten in accordance to guidelines from the Federal Housing Administration require a minimum down payment of three and one-half percent of the property’s sales price. For example, a down payment of $3,500 would be need toward a home that is selling for $100,000.
Loans that are backed by the U.S. Department of Veterans Affairs are routinely issued without a down payment requirement for eligible veterans and current servicemembers.
Closing costs will consist of transactional and ongoing expenses that are needed to complete the purchase of a home. Transactional closing costs are expenses that are in addition to the cost of your home, such as loan origination fees, appraisal fees, pest certifications, property transfer tax and title examination fees. Certain ongoing costs are collected at the closing of escrow to pay for recurring expenses, such as your homeowner’s insurance, property taxes and mortgage insurance.
Speaking with one of our mortgage professionals is a fantastic way to find out about local property tax rates and the estimated amount of money that you might need for closing costs on a home in your area.
The amount of money that you need to buy a home is based on affordable lending guidelines. While some home buyers arbitrarily plan to purchase a home that is three times their annual earnings, you should not rely upon a generic calculation.
In addition to the cost of the home, your other monthly bills are combined with the proposed payment for your new home to establish a ratio of your total monthly debt to your income.
Find out whether you meet the initial qualifications to buy a house. Contact Perennial Funding today at (888) 826-4856 to discuss financing details with a licensed loan officer.