There are really two questions here. There’s the question of what the minimum down payment amount is… and then there’s the question of what would be the best amount to put down. They’re not always the same.
And at Avrus Financial and Mortgage, we know that any down payment isn’t easy. Saving up to put down 20% of a whole mortgage is very difficult. (That’s one reason that a lot of homebuyers apply for FHA loans, for lower down payments and more accessibility to mortgages.)
Having said that, however, we’re of the opinion that it’s almost always in your best interests to put down the largest amount that you can afford. There are three excellent reasons why.
- A bigger down payment means that you’ll have a lower interest rate. Mortgage lenders like low loan-to-value ratios, because it represents less of a risk to them… and the more you put into a down payment, the lower your loan-to-value ratio will be.
- A bigger down payment also means that over time you’ll save more money. With a larger down payment, you’re borrowing less money (and the less you borrow, the less you’ll have to pay interest on!).
- A bigger down payment will give you a financial cushion. The larger the gap between your home’s appraised value and the amount of your mortgage loan, you’ll have some protection.
These are just three reasons why the best thing that you can do is invest as much money as you can afford upfront into the down payment you put on your house. We have a lot more tips on how to take out a mortgage loan that’s just right for your financial situation.
Why not ask us how… today?