Buying a home is a major commitment that often requires a home mortgage in Toledo, OH. One of the requirements for getting a mortgage is to provide a down payment. Here’s a closer look at why you likely need a down payment.
Standard Down Payment Requirements
20% is the average minimum down payment for a home mortgage. This equals $50,000 for a $250,000 home. However, you should consider the type of loan to determine the down payment requirements.
For example, Superior Credit Union offers access to several types of loans. Each type may have different down payment requirements.
Conventional loans typically require down payments of 20%, while FHA loans may only require a minimum down payment of 3.5%.
VA loans may also be available. These options may not require a down payment.
Benefits of a Larger Down Payment
Exceeding the minimum down payment requirements can help when obtaining a home mortgage in Toledo, OH. Providing a large down payment lowers the amount that you need to borrow, which can increase your chances of having your loan approved.
A larger down payment also lowers your monthly payments. You may also receive better interest rates.
Putting down at least 20% on a home loan can keep you from needing to pay private mortgage insurance (PMI). This is often a requirement to protect the lender, but adds to your monthly costs.
If you don’t have enough for an adequate down payment, consider setting a budget. Automating savings, cutting unnecessary expenses, and saving your tax refund can help you save for a larger down payment, making it easier to get a home mortgage.
