What is a mortgage down payment?

Congratulations! You’re ready to stop renting and buy a home. You’ve probably heard you need to save for a down payment, but do you really need one, and—if you do—how much do you need to save?

What is a down payment?

A down payment is a percentage of the total cost of the house. It is usually paid at closing, and it is not financed in the mortgage loan. Many lenders will have a minimum they require for down payment, although that can vary depending on numerous factors.

How much money do I need to save for a down payment?

It depends. Most lenders require you to put money down when buying your home. How much money will vary from lender to lender, but it could be as little as 3 percent. On a $300,000 home, that would be $9,000.

If this is your first home, you may be eligible for assistance programs for first-time homebuyers to help you raise the down payment or defray other costs. Consult with your mortgage loan officer for programs specific to your circumstances.

To help you save money for the down payment on your first home, the state of Oregon has established a First-time Homebuyer Savings account. This program lets you take a deduction off your state taxes when you save money for a down payment on your first home.

Why save for a larger down payment?

You don’t need a large down payment to buy a house, but, in general, the larger your down payment, the smaller your loan will be, which in turn lowers your monthly mortgage payment. In addition, if you put down 20 percent or more, you could avoid paying private mortgage insurance.


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