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What Is the Down Payment Required to Buy a Home?

How much money is required as down payment when purchasing a home? It’s one question that many homebuyers ask. 

Ryan Haley, broker and owner of Atlantic Shores Sotheby’s International Realty, gives us the answer. 

What is the down payment required? The answer is not as uniform as you may think. It will depend on the type of loan that you are going to obtain. 

What Is the Minimum Required Down Payment for Second-Home Financing?

In the resort market such as Ocean City, there is a minimum required for the down payment on a conventional loan, second-home financing, and that is 10% of your own money. The rest will be from the loan. 

On a second home, it is common to see 20% downpayment. However, if you put 25% down, you are going to get the best interest rate, and typically, a little bit more of a streamlined process of settlement. 

What Is the Minimum Down Payment for a Primary Home?

In a primary housing situation, there are different types of loans. There are conventional loans, and there are government-secured or government-backed loans. 

With conventional loans, typically, a minimum of 3% down payment could be obtained. We see 5% down, 10% down, and higher down payments on a primary residence. 

If you are looking for a government loan, such as USDA or what some people refer to as HUD home loan, as long as the population in a certain area is below a certain level, you can apply for and obtain a USDA loan. USDA loan allows for 100% financing. This is an option that many people like, especially if they’re buying their first home.   

Then, you also have VA or FHA, which are also extremely low down payment loans. With these, there are going to be minimum credit scores. So you might qualify for one type of loan but not for another type of loan.  

The best rule of thumb is to have a conversation with your real estate agent to discuss what you are going to do when it comes to purchasing a property. Give your agent a general idea of the funds you have available to put down. At that point, a good real estate agent will then connect you with a reliable local lender early on in the process.

You can then discuss with the lender—based on your credit, income, and available funds—what is the best type of loan for you that will coincide with the amount of money you have to put down on your purchase. 

If you have any questions regarding buying or selling in the Maryland and Delaware market, please contact us through email, chat, or by giving us a call at 410.524.0919. 

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