How Large Of A Down Payment Do I Need To Get A Good Mortgage Rate?

By Ann White

The best way to get good mortgage rates is to have a large down payment. Typically, any amount equaling 20% of the cost of the home or higher will yield the best mortgage rates. Lenders feel more secure when a substantial amount is placed down on a home. This instant equity makes the mortgage a safer bet than one with little or no money down. It is presumed that a person willing to invest that large of an amount into a home is less likely to foreclose on the mortgage.

I Do Not Have Near A 20% Down Payment, Will I Pay Very High Interest

Lower down payments generally equal higher mortgage rates. But there is hope. The federal government, as well as many state and local governments have down payment assistance programs. In many locations you can combine these programs to generate a very large down payment on the home. In Florida, for example, you can combine the 8k federal assistance with the 10k state assistance to have an additional 18k to place on your home. Lenders will consider this as part of your down payment and charge interest accordingly. These programs are often grants that do not need to be repaid – an added bonus.

Should I Continue To Save For A Larger Down Payment Or Buy Now While The Market Is Low

There are many things that you must consider when you are purchasing your home. If this is the ultimate home and a deal you cannot pass up, buy the home with the higher mortgage rates. You can always refinance at a later date. If you are still planning to buy, but do not have a house in mind, save as much as you can before purchasing. You will be very satisfied knowing you have available equity and low interest payments. Either way, do not forget to take advantage of every home buyers opportunity and tax credit out there.

How Large Of A Down Payment Do I Need To Get A Good Mortgage Rate?

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