Fitzsimons Credit Union

rss

Fitzsimons Credit Union blog


Determining Your Mortgage Down Payment

When finalizing a mortgage loan, homebuyers typically have to pay a portion of the total cost of the property upfront. That’s known as the down payment. Last year, the average down payment on a home purchase was about $32,000, according to a report from RealtyTrac, a research provider

That may be an eye-popping and anxiety-inducing figure for many prospective homebuyers. But don’t fret, and don’t cancel your plans — certain types of government-backed mortgages let consumers pay less on down payments when they borrow from lenders like Fitzsimons Credit Union. Here’s a closer look at some of your options and how they can affect the size of the down payment. 

 

Conventional loans

Let’s start with conventional home loans, which are the most common type of mortgage. These typically require down payments of 5% to 20% of the purchase price. The lower your down payment, the higher your monthly mortgage bill will be.

What’s more, if you pay less than 20%, you may be charged for private mortgage insurance, or PMI. That’s because your lender is letting you borrow more money, meaning it will also lose more cash if you end up defaulting on your loan. So the insurance you’re paying cuts the lender’s risk, not yours.

 

Federal Housing Administration, or FHA loans

Loans backed by the Federal Housing Administration tend to have lower down payments. Borrowers may need as little as 3.5% down. These government-backed loans also typically come with more lenient requirements than conventional loans, making them ideal for people with lower credit scores or who need help coming up with down payment funds.

Anyone can apply for an FHA loan, regardless of income. However, you’ll be able to borrow up to only a certain amount, which will be based on where you live. Also, the program requires a form of mortgage insurance, including an upfront payment, which can be covered by the loan, and monthly premiums.

 

Other government loans

The Department of Veterans Affairs, or VA, offers another type of government-backed mortgage called a VA loan. These are available to qualified active-duty service members, veterans and surviving spouses, as well as reserve and National Guard members. One of the biggest advantages of VA loans is that they sometimes don’t require any down payment. However, you will be charged a funding fee of 2.15% to 3.3% of the loan amount, and it can be included in the mortgage. Unlike FHA loans, which have borrowing limits depending on the property’s location, VA loans are capped at $359,650 for all prospective homebuyers.

The United States Department of Agriculture, or USDA, offers home loans to low-income borrowers who live in rural areas. These products typically don’t require down payments.

 

The takeaway

Unless you qualify for a USDA or VA loan, chances are good that you’ll have to put down at least some money when sealing the deal on your mortgage. Therefore, it’s a good idea to ramp up your savings in the months leading up to your purchase and to pay down your debts to boost your credit score, which will help you lock in lower interest rates.

To free up additional money for the down payment, consider cutting back on nonessential expenses. Although that may not be much fun in the near future, it’ll pay off over the long haul. In the meantime, keep your mortgage options open, and know that the aforementioned government-backed loans can reduce the down payment you’ll need for your new home.

Tony Armstrong, NerdWallet




Comments are closed.


Tags

equity mortgage skimming telephone scam 104EZ 1st home 1st Mortgage 2nd Mortgage a partnering credit union accounts anniversary anschutz ANSCHUTZ CAMPUS anschutz campus credit union anschutz credit union anschutz credit unions anschutz financial institution apps ATM atown Aurora aurora community Aurora Credit Union aurora credit unions auto auto loan auto loans AUTO PROMO auto promotions auto purchasing AUTO REFINANCE black friday borrow budget budgeting budgets building credit building teen credit business accounts buying a house buying a new car buying an old car calls car buying CAR DEALS car financing car refinance CARBUYING carbuying for teens Cardvalet cars CARS IN AURORA cars to fit your family checking Children savings accounts childrens hospital Childrens Hospital Colorado childrens miracle network childrenshospital CHRISTMAS MONEY christmas presents cmn college college affordability Colorado Comitis Crisis Center Community community credit union Community Involvement Aurora conserve credit credit building credit card credit history credit report credit score Credit Union Credit Union Leaders credit union strong Credit Unions for Kids credit unions in aurora CUNA cutting costs cybersecurity data breaches debt debt-payoff Denver Area Credit Union deposit diy do it yourself Dreams Thrive Here drive-in education Emergency Funds equifax Executive Team experien extra income Extrasbenefits Fin Lit finance a business finances financial education financial fit financial goals financial literacy Financial Literacy Classes financial mistakes financial planning Financial resources for parents FINANCIAL STABILITY financing your vacation finding the right car for you Fitzsimons fitzsimons army hospital FITZSIMONS CREDIT UNION Fitzsimons Credit Union CEO fraud free credit report free tax help getting ready to move gift cards Giving Back goals Grocery Cart Races h&r block h&rblock HELOC Helping the homeless hispanic outreach historic aurora history holiday accounts holiday budget HOLIDAY LOAN HOLIDAY SAVINGS holiday shopping' holidays home home buyer Home buying home improvements home investing Home Loans home selling homebuying homebuying mistakes housing how to prepare house to be sold how to save money on auto loans identity identity theft ilovemycreditunion income tax income tax return insurance interest rates Internal revenue service International credit union day invest IRS Juntos Avanzamos Juntoz Avanzamos Keller William:5280 Home Team kellerwilliams lastpass leasing a car library LikeABankButBetter line of creditt loan loans LOCAL Making a Difference making your money work for you member appreciation event. member benefits Millennials house mobile app mobile deposit money mortgage Mortgage Loan mortgage refinance moving my tax return national credit union month Nerdwallet new car new home new vs. old car NEW YEARS FINANCIAL RESOLOUTION new years resolution new years resolutioons online online learning and fun online safety Partnering Credit Union phone photo deposit ProtectMyID rainy day fun read realtor advice red rocks REFINANCE representative retirement safety SandraNeves save SAVE FOR THE HOLIDAYS saving Saving for a vacation SAVING HABITS saving money SAVINGS savings for children savvy saver accounts scam Scholarship scholarship grants school security security breaches selling your home selling your house senator Small Business small business loans small houses smart savings smartphone southlands Southlands credit union spanish speaking stanley marketplace starting a business stolen identity student loans SUMMER SUMMER DEALS summer vacation taming the debt dragon TAX HELP tax prep software Tax refund Tax return tax season tax tips Taxes teachable moments teaching children about money teen accounts teen debit cards teen scholarships thanksgiving thanksgiving dinner This Is Aurora TOGETHER WE ADVANCE TURBOTAX university used car used car loans Vacation vacation savings vacation tips VEHICLE REFINANCE Von Willebrand Disease VP of Finance wealth winter is coming WITHHOLDINGS Youth youth month youth savings accounts

Federally insured by NCUA |  Equal Opportunity Lender  |  © 2019 Fitzsimons Credit Union  |  303-340-3343  |  1-800-933-5839

Fitzsimons Credit Union recognizes the importance of ensuring our website is accessible to all users. We are in the process of redesigning our site in accordance with the requirements of the Americans with Disabilities Act (ADA) and will be publishing updates to the website within the next several months so that our content is readable via non-graphical, text-only browsers. We appreciate your patience during this process.

FitzsimonsCU.com links to third party websites that may not be controlled or owned by Fitzsimons Credit Union. Fitzsimons Credit Union may not be responsible for the content of the alternate web site neither does it represent either the third party nor the member if the two enter into a transaction. Fitzsimons Credit Union does not represent either the third party or member if a transaction is entered. Privacy and security policies may differ from those practiced by FitzsimonsCU.com.

NMLS #459085
     
Shared Branch Logo  CO-OP ATM Logo Centennial Logo

AutoTrek Logo

  CUDC Logo

AFF NCUA LogoEqual Housing Logo      

Please Note:

You are now leaving the Fitzsimons Credit Union website. We are not responsible for
the privacy practices of any other web site. We encourage you to read the privacy policies
of any web site you access, especially if individual identifying information is being collected.

Fitzsimons Credit Union does not represent either the third party or member if a transaction is entered.

Continue Cancel

Don't ask again