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How much should I put down on a mortgage?

  • The decision of how much money to use as a down payment can be confusing.
  • Your initial down payment on a home loan is the portion of the purchase price that you pay upfront at closing.
  • This shouldn’t be confused with the closing costs of a loan, which are not included in the down payment.

What should I consider when choosing a down payment amount ?

  • Consider the Loan you are applying for such as a Conventional, VA, USDA, or Jumbo.  Each program has specific requirements.
    • Military veterans can qualify for a 100% VA loan with no money down.
  •  Conforming loans can have as little as a 3.5%  down payment. However, there is a price for lower down payments on conforming loans.
    • Conforming loans with less than 20% down payment have a PMI, Private Mortgage Insurance, cost.
  • A lower down payment translates into a higher monthly loan payment with higher interest rates and Private Mortgage Insurance.

What is the difference between the down payment and closing costs?

  • Closing costs represent the expenses above the purchase price.
  • These are expenses that are incurred to close your mortgage loan and are passed on to you at the time of closing.
  • Incurred costs include fees such as the following:
    1. loan loan origination fee,
    2. discount points,
    3. appraisal fees,
    4. title searches and  title insurance
    5. surveys, taxes
    6. deed recording fees
    7. credit report charges.

When is mortgage insurance required?

Mortgage insurance is required when the conforming loan amount is over 80% of the purchase price .
  • This can occur when the down payment is less than 20%.
  • Mortgage insurance can be removed once sufficient equity is payed down over the life of a loan.
Although there are disadvantages of low down payments, there are also obvious advantages.
Take time to weigh the two and assess which is the best for you and consult with your loan officer.

Why allow New South Mortgage to work for you?

  • NSM is a Mortgage Bank, not a broker.  This saves you broker fees and allows us to offer lower interest rates.
  • With over 40 years and millions loaned, NSM knows how to  put you first.
  • New South Mortgage offers some of the most competitive rates in the Nation!
  • Fast and efficient, we close our loans on average of 20 days or less.
  •  Our team has worked to obtain the most versatile loan packages in order to give you options.
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