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Writer's pictureMichael Belfor

Buying a House: Today’s Down Payment Requirements and Options


Buying a house isn’t just about the sticker cost or the monthly payment. A large part of your housing budget will also be your down payment. If you’ve seen lender ads before, you know that this number can be all over the board.



But is a bigger down payment really better? Can you really buy a home with no money down?


We’re here to give you the lowdown on down payments!


What Is a Down Payment?

Let’s start with the basics. When you’re buying a house, you’re generally required to make a cash payment upfront. That’s called the down payment.


How much cash you put down is typically expressed as a percentage of the purchase price. For example, if you wanted to do the “standard” 20% down payment on a house that costs $450,000, you would pay $90,000 toward the cost of your home while financing the remainder.


Now, it’s important to remember that your down payment is made in addition to closing costs, such as escrow fees. Some homebuyers choose to finance those costs as well, but they’re another item to keep in mind when determining your housing budget.


Where Does the Down Payment Come From?

The money for a down payment isn’t included in your financing. Rather, it’s a way to let your lender know you’re committed to buying a house and to fulfilling its financial obligations. Think of it as a nonrefundable deposit.


Many homebuyers spend some time saving for a down payment. They create a monthly budget; scrimp where they can; and put any extra money, such as birthday card cash or work bonuses, toward the down payment amount.


Others may choose to obtain a personal loan or sell a big-ticket item like a boat or car. (Reminder: If you take out a loan for the down payment, you’ll need to include that monthly payment on your application for qualification purposes.)


Some buyers who already own a home will also consider tapping into their primary home equity if they’re buying a house as a second home, a vacation home, or an investment property.


There are also a lucky few who receive the cash for their down payment as a gift. This is perfectly acceptable—and great for them!—as long as the stipend is accompanied by a gift letter explaining that the money is, in fact, a gift and not a loan. The gift letter should also outline the relationship between the giver and the borrower.


Buying a house isn’t just about the sticker cost or the monthly payment. A large part of your housing budget will also be your down payment. If you’ve seen lender ads before, you know that this number can be all over the board.


But is a bigger down payment really better? Can you really buy a home with no money down?


We’re here to give you the lowdown on down payments!


For more, shoot us a message or give us a call today!



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