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Making a Down Payment on a House

You don’t have to put down 20% to buy a home — you may be able to qualify for a fixed-rate mortgage with as little as 3% down.

What is a down payment?

A down payment is an upfront payment towards the total cost of a home you plan to buy. You typically pay a percentage of the home’s cost, with the mortgage you get making up the difference. For example, the average down payment on a house is 20%, so for a $400,000 home ($80,000), you would get a mortgage to finance the remaining $320,000. 

Run some numbers

What you need to know about making a down payment

If you’ve stashed away some cash for your down payment that’s great! But make sure you set a realistic budget when considering how much to put down.

  • It’s one of the factors in lending decisions. Your lender will consider your down payment along with your credit score, credit history, total debt, and annual income to see if you qualify for a loan.
  • The size of your down payment can affect your mortgage options. What you put down on your home can affect what financing options and interest rates you’re offered.
  • The more you put down, the less you may pay in interest. Because you’re borrowing less money, a larger down payment may reduce the interest you pay and lower your total mortgage costs. Plus, your monthly payment may be lower.
  • You don’t have to put down 20% to get a mortgage. But you may have to pay mortgage insurance with a smaller down payment. Talk to a home mortgage consultant today to see if you qualify for a low down payment mortgage.
  • Keep a little cash handy. After you pay all closing costs, most lenders want you to have enough money left in savings to cover your mortgage payments for a few months. Be sure to check with your mortgage consultant to get specific requirements.

    You might also want to have some cash set aside for any unexpected expenses that might come up after you move into your new home.

 First-time homebuyers 

Learn more about buying your first home.

Low down payment mortgage options

If you’re worried about coming up with a down payment, there are programs for homebuyers who have limited cash and less-than-perfect credit scores.

  • With yourFirst Mortgage®, qualified homebuyers can put down as little as 3% on a conventional fixed-rate mortgage.
  • FHA and VA loans also offer low and no down payment options for eligible homebuyers.
    FHA loans have the benefit of a low down payment, but consider all costs involved, including up-front and long-term mortgage insurance and all fees. Ask your home mortgage consultant to help you compare the overall costs of all your home financing options.
  Explore loan options to get a better idea of what loans might fit your financial situation.

Gifts and loan programs may help you with your down payment

  • Some loans allow you to use monetary gifts from family towards a down payment.
  • You may also be eligible for programs that help with down payments and closing costs. For example, our NeighborhoodLIFT® program delivers down payment assistance and financial education to some homebuyers in certain areas. Contact a local consultant to find out what programs are available in your area and see if you qualify. 

Transcript: Making a down payment

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When you're buying a house, in most cases, you'll need to raise a certain amount of money in advance to use as a down payment.  A down payment is money you pay to make up the difference between the price of the home and the amount of the mortgage.

The more money you have available for a down payment on your home, the less you'll have to borrow. This means you can reduce the interest paid and lower your total mortgage costs.

Your choice of down payment can influence what financing options and interest rates are available to you.  The size of your down payment impacts your mortgage amount.

A lot of people ask how they can save for a down payment. Here are three tips you may find helpful:

Pay yourself first: When you pay your monthly bills, make the first payment to your savings or investment account.

Better still, set up an automatic transfer from your checking account to a dedicated down payment savings account, so you don't forget.

Spend less, save more: The less you spend on items you don't need, the more you'll save for a down payment.

Finally, Create a spending plan: Record your expenses and compare them to your income. Tracking your spending habits reveals potential areas where you can save.

When you pay yourself first, spend less and save more, and create a spending plan to follow, you're on the right track to saving up for a down payment.

Wells Fargo Home Mortgage is a division of Wells Fargo Bank, N.A.
© 2014 Wells Fargo Bank, N.A. All rights reserved. NMLSR ID 399801. Equal Housing Lender.


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Conventional conforming mortgage 

A mortgage that is not obtained under a government program (FHA or VA) and satisfies the underwriting guidelines and loan limits set by Fannie Mae or Freddie Mac.