How much money do you need to buy a house? As a first-time home buyer, it’s essential that you understand all of your options in order to maximize funds for a down payment. You don’t want to overpay, but you should make sure you have enough of a down payment for a manageable mortgage.
What’s Required for a Down Payment?
To figure out how much down payment you should accumulate, you’ll first need to consider the price of the house you’re looking to purchase.
Banks consider 20% an ideal down payment, but if you’re looking at a $300,000 home, $60,000 may not be feasible for a first-time buyer. The good news is that there are loan programs available to help first-timers achieve their home ownership goals with much less down.
The average first-time home buyer will need a down payment of 3-6% of the home’s sales price. For example, that $300,000 loan may now only require 4.5%, or $13,500, down. However, keep in mind that the less you put down, the more you’ll pay later, so you should consider all the factors.
Read: Roadmap for First-Time Luxury Home Buying: What You Need to Know
Fannie Mae and Freddie Mac: Mortgage Types Available
There are various mortgage types available to first-time buyers that don’t require a huge down payment. Fannie Mae and Freddie Mac are programs sponsored by the government that works with local lenders to accept down payment amounts as low as 3%. Favored by lenders, these are ideal for a new home buyer who can’t afford to put down a large sum.
FHA loans are also popular among first-time buyers. Insured by the Federal Housing Administration, these loans can be obtained for as low as 3.5% of the purchase price for individuals with decent credit scores. Lenders also like these insured loans because they won’t experience a loss if you happen to default on the mortgage.
Hidden Fees of Home Ownership: What to Remember
It’s also important to consider all of the costs that are involved when you go from renting to owning a home. For example, you’ll now have to pay property taxes on your new home. TheNevada’s average property tax rate is 0.96% of the assessed home value so that you could be paying almost another $3,000 a year in taxes for a $300,000 property. That number should be included when you’re determining how much mortgage you can afford.
You should also remember that you’ll be entirely responsible for any maintenance or repairs your home needs. A popular rule of thumb is that owners should set aside 1 percent of the home’s purchase price every year for these costs alone.
Your first step on the road to owning a home is learning more about the mortgage programs available to you so that you can accurately determine your down payment amount. A mortgage expert in partnership with a real estate agent can match you with the appropriate program to get you into a home sooner at a price that works for your budget.
Want to get a smooth start your journey to first-time home ownership in Las Vegas, and learn more about the options available to you? Contact Kym E. Booke, REALTOR, and Certified Negotiation Expert today.
