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Down Payment on a House

Making a down payment on a house

Putting more money down on a home can lower your loan costs, but is not required. You may qualify for a
mortgage with a low down payment or no money down.

What is a down payment?

You pay a percentage of the total cost of your home upfront and the mortgage covers the difference. The size of your down payment can affect your loan options. 

How does down payment affect my mortgage amount?

On a $250,000 home, a 20% down payment is $50,000 with a $200,000 mortgage. Try our customized mortgage rate tool below for more specific loan scenarios.

How much money do I need to put down?

Some mortgage programs offer a down payment as low as 3% on fixed-rate loans or none at all. With a low down payment, mortgage insurance will be required, which increases the cost of the loan and will increase your monthly payment. Talk with a home mortgage consultant about the loan amount, type of loan, property type, income, first-time homebuyer, and homebuyer education requirements to ensure eligibility.

You may also be eligible for grants or credits available to homebuyers in your community. Mortgage insurance will be required, which increases the cost of the loan and will increase buyers’ monthly payments.

Why save for a larger down payment?

You don’t need a large down payment to buy a house. But, if you pay more up front, you may pay less interest overall, lower your monthly payment, and avoid having to pay mortgage insurance.

Talk to a home mortgage consultant about your down payment options.

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See how a down payment affects your mortgage options


Low down payment loans

These programs require a low down payment. And, you may be able to use grants
or gift funds to help with up-front costs.

Dream. Plan. HomeSM mortgage

Whether it’s your first home or your next, this program can put a home within reach of eligible buyers with as little as 3% down on a conventional fixed-rate mortgage,. With a low-down payment loan, mortgage insurance will be required, which increases the cost of the loan and will increase your monthly payment. We’ll explain the options available, so you can choose what works for you.

FHA and VA loans

Government programs 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.

  First-time homebuyers  

Learn more about buying your first home.

Get help with your down payment

Saving for a down payment can be challenging. Look for options that fit your budget.

Explore all of your options, including grants and credits

You may qualify for grants and credits that assist homebuyers with limited cash at closing, through programs such as the Dream. Plan. Home. closing cost credit. Some of these may be combined with a low down payment loan.

Learn how lenders factor in your down payment

The size of your down payment — along with your credit score, credit history, total debt, and annual income — help lenders determine if you qualify for a loan, and can affect the financing options and interest rates you’re offered. 

You don’t have to put 20% down to get a mortgage 

Low down payment mortgage options allow you to budget for other expenses, but you may have to pay a monthly fee for mortgage insurance, increasing your overall costs.

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. 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.

Talk to a home mortgage consultant about your down payment options.

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Making a down payment (video)

Transcript: Making a down payment

[ Theme Music ]

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.
© 2014-2022 Wells Fargo Bank, N.A. NMLSR ID 399801.

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Loan-to-value ratio (LTV)

The amount you owe on your loan divided by your home's original value, which is either the price you paid for it or the appraised value at closing, whichever is less. This number is always expressed as a percentage.