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Affording a down payment for a home requires careful financial planning and consideration. If you are looking concerned about having enough money for your down payment, don't worry! There are several options for you to consider. 

Down Payment Assistance (DPA) Programs

Historically, 20% of your loan amount was the standard for loan qualification and the best rates/terms. However, that amount may not be feasible for many buyers today.

One option to explore is down payment assistance (DPA) programs. These initiatives aim to assist homebuyers in overcoming the challenge of saving for a down payment. They provide financial aid in the form of grants, loans, or other assistance to eligible buyers, making homeownership more attainable, particularly for those with limited income or savings.

In our area, there are various DPA programs and resources you can consider:

• Downpayment Plus^® Programs
• Home-Buy the American Dream
• Movin' Out: Housing solutions for people and families with disabilities
• REALTORS® Association of South Central Wisconsin (RASCW) Housing Foundation
• Wisconsin Housing and Economic Development Authority (WHEDA) Loans
• U.S. Department of Housing and Urban Development (HUD)

A mortgage lender can be a valuable resource while you are shopping for your home. We customize each offer based on individual circumstances, including rates, costs, and loan structure, so you enter the offer stage with the best possible information. For example ...

First-Time Homebuyers

Generally, a first-time homebuyer is an individual who has not owned a primary residence in the past three years. This means you may still be considered a first-time homebuyer if you have previously owned a home but have not done so within the specified timeframe. 

With good credit, these buyers can qualify for a little as 3% down. 

Repeat and Move-Up Buyers

Repeat and move-up buyers can qualify with as little as 5% down. That money can come from savings, gift, stock/investments, and some 401(k) plans will allow you to borrow from yourself for the down payment. 

However, any time you have less than a 20% down payment, you will pay what’s called Mortgage Insurance. This is separate from your house/fire/flood insurance, and it’s a premium you pay for providing a smaller down payment. Mortgage Insurance, (MI), or PMI (private mortgage insurance), is tiered based on down payment percentage and the borrower's credit score. With good credit, MI is very affordable, but will be a different price for 3%, 5%, 10%, and 15% down. 

So, when running your budget numbers for your home purchase, it's important to compare the options at the next closest tier. For example, if you’re thinking of a 9.5% down payment, it might make sense to wait to get to 10%, but if you’re at 6% down, look at 5%. Again, it is critical to get your monthly payment right, and within budget, but it’s also a benefit to keep some cash on hand after closing. Work closely with a mortgage advisor who can lay out all your options for you to decide.

If you're looking for a new home, we're here to help. Reach out to one of our experienced mortgage advisors today!