Down Payments: How Much is Enough?

If you’re trying to enter the real estate arena, then you know just how difficult it can be to save for a down payment. After all – you’ve been told that the more you put down, the better off you’ll be in the long run.

But how much is “enough”? What price is attainable for you? Being a first-time homebuyer has its challenges, but it also has many programs to help you jump through those hoops.

Check out our tips for down payments below:

First, what is a down payment?

Down payments are the cash you pay upfront when making a large purchase – in this scenario, that purchase is your home. A 10% down payment on a $300,000 home would be $30,000.

This payment is your contribution toward the purchase and ownership of the home; however, the lender provides the rest of the money (that you did not put towards the home) to buy the property.

How much?

Here’s the honest truth: putting down at least 20% on a home will greatly increase your chances of getting approved for a mortgage at a nice rate, and you’ll avoid the mortgage insurance. So a 20% down payment on that $300,000 home we mentioned earlier would be $60,000.

Take a deep breath – that’s a lot of money! If you have the means to do so, then please do so! However, for most people, putting 20% down is a lot more difficult. Fortunately, there are programs that can help you!

There are a variety of mortgages, and they all require different down payments. You just have to find the best one for you!

VA Loans: Usually do not require a down payment. These are guaranteed by the U.S. Department of Veterans Affairs, and are only for current and veteran military service members and eligible surviving spouses.

USDA Loans: The U.S. Department of Agriculture’s Rural Development Program handles these. They also have no down payment requirement. USDA loans are for rural and suburban home buyers who meet the program’s income limits, among other requirements.

FHA Loans: Handled by the Federal Housing Administration, these loans range, but require as little as 3.5% down. Going back to the $300,000 home example, a 3.5% down payment would be $10,500.


Your lender will also offer you better mortgage loan rates if you do your work and your research. Your credit history matters, as well as comparing lenders! Pstt…we’ve got some tips for you on a previous Mortgage Shopping guide.

The Facts

Like we mentioned before, the more you’re able to put down, the better (financially-speaking) you will be. You usually receive a better interest rate, lower fees, more equity in your home faster, and a lower monthly mortgage payment.

If you have the time and the means, save for that 20% down payment.

However, that might not be the case for everyone. Check out the various loans we mentioned above and see if any of them match your needs and what you’re able to contribute towards.

Finding the right down payment amount for you takes some work:

  • Use a mortgage calculator and play around with different down payment options to see how it affects the monthly mortgage amount
  • Set a budget and stick to it

For more real estate guides and tips, check out Alliance’s Blog.

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