Saving up to buy a home can be a bit of a high stakes guessing game. While there’s no such thing as saving too much money, no one wants to defer the dream of purchasing their first home any longer than they have to. Yet, if you’ve never purchased a home before, how can anyone know when enough savings is enough? The experts at Evolve Bank & Trust are here to bust some of the biggest myths when it comes to how much money down is needed in an effort to help new homeowners with this very question.
20% Down Payment is Required
20% Down Payment is Required
It’s a common assumption that all mortgages require a 20% Down Payment. When considering the modern day cost of house, this figure is astronomic for most young people. However, this is in fact a myth. FHA Loans are backed by the federal government and can have Down Payments as low as 3.5%. These loans are designed for first time home buyers to help make home ownership more accessible to qualified buyers.
Down Payments are Always Required
Down Payments are Always Required
While in many cases a down payment will be required, this too is a myth. Each loan product and program is unique. Programs such as VA Loans don’t require any money down. Additionally, even when down payments are required, grants and down payment assistance can be available which can cover the cost in full.
Down Payments and Closing Costs are the Same
Down Payments and Closing Costs are the Same
This is a major myth that come simply from never having experience a closing. People talk a lot about down payments but not as much about closing costs. Down payments do not cover your closing costs, and this is an additional cost you will need to save towards.
With all the assumptions and uncertainties of first time home buying, it’s important to have a trusted lender* by your side. The right lender would ensure each of these myths and more are debunked, and they can help you find down payment assistance programs and grants.
To get started with an Evolve Home Loan Advisor, click here.
