How Much Do You Know About Down Payments?


Whether you’ve owned a home before or you’re ready to take the leap into homeownership for the first time there are usually a handful of questions around what is required for a down payment and how-to best source down payment assistance. In today’s blog we’ll go over how much you really need for a down payment and how you can get help with down payment and closing costs.

Interesting Statistics About Your Credit Score and Down Payment

  • According to a study done from Fannie Mae’s ESR team, fewer than 1-in-4 consumers are aware that low down payment programs exist. With that said, many still don’t know mortgage lenders’ credit score, down payment, or debt-to-income ratio requirements.
  • Most people think that you need a minimum credit sore of 650 when actually a 580 is sufficient.
  • In regards to down payment, many think that they needed 10%. Some mortgage lenders offer small down payment mortgages — as little as 3down payment— to borrowers who qualify. Get in touch with your loan officer to discuss your options.
How Much Do You Really need for a down payment?

First let’s clear up a common myth. You DO NOT need 20% down for a down payment. A survey from Fannie Mae shows only 17% of consumers know the minimum options are actually between 1 – 5% of the purchase price and 40% don’t know how much they need at all.

down payment image2 _ EHL

There are many mortgage loans available that require as little as 3% down for first-time buyers, and some ask for only 3.5% down from repeat buyers. There are even loans available for Veterans that provide 0% down payment options too.

Saving for a Down Payment

Saving for a down payment is often the biggest hurdle for a first-time home buyer. Depending on where you live, median income, median rents, and home prices all vary.  However, if you’re planning to put down just 3%, the research shows it may be possible in most states to have enough saved for a down payment in less than a year. That puts homeownership in a much closer reach for many potential buyers, maybe even you!

How can I get help with my down payment?

Regardless of the loans available, many buyers still need assistance with a down payment. The great news is, there are a lot of ways to tap into down payment assistance options:

  1. Assistance from Family Members:

The (NAR) said, “a third of recent first-time buyers received down payment assistance from family members.” They also mentioned, “the average net worth of those aged 75 and over stands at $264,800…They just might offer the boost the next generation needs to become homeowners.

That means one of the ways to find help with a down payment is to accept a gift from a family member. If this is an option for you, make sure you talk to your loan officer before you accept the money, to ensure you document the process the way it is required by your loan. This way, it will be received properly and you can still potentially qualify.

  1. Down Payment Assistance Programs:

With EHL's FHA Down Payment Assistance program you only need 3.5% and you can cover some of that with the Down Payment Assistance grant.  

What is the FHA Down Payment Assistance Program?

With this program, first-time home buyers can get money for down payment and closing costs. Through NJ’s Housing and Mortgage Finance Agency, Emerald Home Loansis able to offer first-time buyers in NJ an FHA Mortgage with a $10,000 grant for down payment and closing costs.

Program Details:

    • $10,000 towards down payment and closing costs
    • All New Jersey properties eligible (no zone restrictions)
    • First-time buyer is anyone that has never owned a home or hasn't owned in the last 3 years

Fine Print:

    • Approved counseling required
    • 3yrs tax returns, NJ and Fed
    • 3mo bank statements
    • Borrowers with funds to cover 20% down payment ineligible
    • Forgivable 2nd lien expires after 5 years as primary residence
    • First lien has 9-year recapture tax

For more information, questions, or to see if you’re eligible visit our website here. You can also visit our First-Time Home Buyer Resource page to see what other programs are available.

Keep in mind, there are more than 2,500 down payment assistance programs available (by local areas like city, county, or neighborhood), and some of them are even specifically for first-time buyers.

It is so important to get familiar with these options by doing your homework before you plan to buy a home. Determine what is available in the area where you ultimately want to live, so you have all the details you need to take advantage of the down payment assistance option that is best for your family.

Are you ready to take the next step? Contact us today. 

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