How to Plan the Right Down Payment for Buying a House

Coastal and sea front property

Buying a house is now easier than ever. You can apply for a home loan and get approved for it if your credit score is high enough. But in most cases, you’d have to pay a certain amount as a down payment.

You can plan for this payment at your convenience. But you should know that a big down payment isn’t always necessary. The 20% down payment requirement isn’t required anymore. But that has its downsides. In this article, learn how to plan the right down payment for buying a house.

Minimum Down Payment Requirement in the US

In the US, there always existed a requirement of a 20% down payment. So you’d have to pay 20% of the total amount. But, the provision isn’t required anymore. It depends on the type of mortgage loan you’re applying for.

• FHA Loan
If you’re applying for Federal Housing Administration, then you have to put down as little as 3.5% of the amount. This is the most accessible loan you can get.

• VA Loan
The US Department of Veteran Affairs offers VA Loans. These loans do not need a down payment, and approval is guaranteed most of the time. But it would help if you were a veteran service member to avail of this loan.

• USDA Loan
Similarly, if you’re applying for the US Department of Agricultural Rural Development, you do not have to pay any down payment.

Any other commercial mortgage type will require you to pay as little as 3% of the total amount. So if you need a $100,000 loan, you’d have to pay $3,000. The government doesn’t back these conventional loans. But they follow the Fannie Mae and Freddie Mac guidelines.

The down payment requirement also depends on the lender and your credit history. The minimum down payment might be 3.5% set for FHA loans, but you need to have a credit of 580 or higher. But if you have a credit score between 500 and 579, the minimum requirement is 10%.

How Much to Put Down as Down Payment?

You must be wondering about the down payment percentage you should be aiming for. It depends primarily on your goals and current financial condition. If you’re financially stable, you might get a lower down payment quote. But always aim for something higher. It’d ensure you avail lower interest rates.

Why Apply for a Higher Down Payment?

There are several advantages to applying for a higher down payment. You’ll receive a lower interest rate.

The higher your down payment is, the lower the interest rate you can expect. You’d also have to pay lower processing fees. You’ll have more equity in your home too. So as much as possible, you should go for a higher down payment.

Financial experts recommend starting saving at the earliest so that you can pay a higher down payment when applying for a loan. Even if a big down payment isn’t always necessary, plan for a higher down payment. Work with a reputed agent to get access to all the options available.

EAN Content

Content shared by this account is either news shared free by third parties or sponsored (paid for) content from third parties. Please be advised that links to third party websites are not endorsed by Estate Agent Networking - Please do your own research before committing to any third party business promoted on our website. As an Amazon Associate, I earn from qualifying purchases.

You May Also Enjoy

Breaking News

Nationwide House Price Index – Thoughts from the Industry

The latest Nationwide House Price Index for July 2025 shows that: House prices increased by 0.6% between June and July of this year. On an annual basis, the average house price increased by 2.4% up from a 2.1% annual rate of growth in June. As a result, the average UK house price now sits at…
Read More
Breaking News

Nationwide House Index – July 2025

Annual house price growth edges higher in July Annual rate of house price growth increased modestly in July to 2.4%, from 2.1% in June House prices were up 0.6% month on month UK house price to earnings ratio at lowest level in over a decade at c.5.75 Headlines Jul-25 Jun-25 Monthly Index* 540.5 537.4 Monthly…
Read More
Breaking News

Late payment reforms offer hope for SMEs

The Government has unveiled its Small Business Plan aimed to support SMEs and unlock growth. This plan outlines their intention to tackle late payments, an issue which costs the UK economy £11bn a year and forces 38 businesses to shut down every day. Richard Beresford, Chief Executive of the National Federation of Builders (NFB), said:…
Read More
Breaking News

Late payment reform is welcome, says FMB

Measures announced as part of the Government’s ‘Small Business Plan’, to tackle late payments and tool theft, futureproof skills, and improve access to finance, are welcome steps to create a more level playing field for small building companies, say the Federation of Master Builders (FMB). Brian Berry, Chief Executive of the FMB commented: “Late payments…
Read More
Social Housing 2019
Breaking News

Build to Rent sees global surge

Build to Rent Goes Global: New Data Reveals Surge in UK, US, Australia and New Zealand New global data from Inventory Base reveals that Build to Rent (BTR) is no longer a UK phenomenon. n, it’s a rapidly expanding housing model gaining serious traction across New Zealand, Australia, and the United States. Nowhere is this…
Read More
Breaking News

Number of estates paying IHT jumps 13%

HMRC has released its annual inheritance tax (IHT) stats for the 2022/23 tax year. Headlines include: Number of estates paying inheritance tax rose 13% to 31,500. The average IHT bill fell by 1.4% to £212,000. 0.03% (202) of estates paid 11% of all inheritance tax and 1% of estates paid around 65% of all inheritance…
Read More