When you apply for a home loan with a Colorado Springs mortgage broker, you’ll need to be ready to make a down payment on the house. This helps give the lender confidence that you’re going to repay the loan over time. It shows them that you’re serious about the purchase. But how much do you really need to borrow? It’s not as simple as you might think.
The 20 Percent Rule
Conventional wisdom suggests that you should make a down payment of at least 20 percent of the purchase price of the house. However, it all depends on your personal financial situation. If you have great credit, you may be able to make a lower down payment as the lender will still see you as a qualified borrower. However, if your credit score is low, you may need to put as much as a 25 percent down payment on the property to qualify for your Colorado Springs mortgage.
The Type of Loan Matters
Your credit score is only one factor here. The type of mortgage you’re taking out can influence the amount of money you need to pay upfront. For example, if you’re using a VA loan to finance the home, you may not need to put down any money as a down payment. If you’re using an FHA loan for a qualified property, you could qualify with as little as a 3 percent down payment. Before you agree to a loan, make sure you understand the terms fully. If you can’t afford the down payment, you may need to rethink your loan options or housing choice.
There Are Down Payment Assistance Programs
If you do have to make a down payment, you may not have to pay the full amount out of pocket. Colorado has tons of first-time homebuyer programs and down payment assistance programs to help you get into the home of your dreams.
If you’re ready to start looking at homes, don’t wait. Get pre-approved for a Colorado Springs mortgage before you start your search. Contact us to speak with one of our experienced mortgage brokers today.