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How Much Money Do I Need to Buy a House?
Hey, it’s Stacy! One of the most common questions I get asked is: How much money do I need to buy a house? After 30 years in mortgage lending, I’ve got the answers for you, so let’s dive in!
The Two Key Costs When Getting a Home Loan
First and foremost, you need to know that there are two separate costs involved: a down payment and closing costs. Many people think they only need a down payment, but that’s not the case — you need to plan for both!
Understanding Down Payments for a Home Loan
Your down payment can vary based on several factors, including your credit score, whether you’re a first-time homebuyer, or if you plan to live in the home or use it as an investment property. For this discussion, we’re focusing on owner-occupied homes — properties where you'll live.
- First-time homebuyers with a credit score of 700+ and a debt-to-income ratio of less than 49% may qualify for a conventional loan with just 3% down.
- Conventional buyers who have owned a home before or in the last three years may need a 5% down payment.
- Buyers with higher debt-to-income ratios or lower credit scores might qualify for an FHA loan with 3.5% down.
To calculate your down payment, simply multiply the purchase price by the down payment percentage.
For example: If you’re buying a $400,000 home with 3% down, multiply $400,000 by 3%, which equals $12,000.
You can also calculate your projected monthly amortization using the payment calculator, click here.
Watch our upcoming seminar on Buying Investment Properties if that’s of interest to you!
