All About Down Payments

Set aside some money to cover initial home expenses. New homeowners often find things that need fixing, or discover that they need an additional piece of furniture to make the new home work for their family. Moving expenses and utility set-up fees can also add up. When thinking about how much you can afford for a down payment, make sure to set aside some money to cover these expenses. 

Your down payment amount affects the types of loan you can get, your interest rate, and your loan costs. In general, the higher your down payment, the less your loan is likely to cost. 

  • In most cases, you need a down payment of at least 3 percent of your target home price. Many loan types and lenders require 5 percent down or more. 
  • You can often save money if you put down at least 10 percent of the home price, and you'll save the most if you put down at least 20 percent. 
  • When CFCU decides the interest rate and loan costs to offer you, we typically look at your down payments in increments of 5 percent. There are usually no savings for putting down "almost" the required amount. For example, if you have enough saved for a down payment of, say, 8 percent of your target home price, think about whether you could save up a little more before buying, or choose a slightly cheaper home, so you can hit the 10 percent mark. If you're unsure about what to do, consider talking to a HUD-certified housing counselor. 

Low-or no-down payment options may be available to you. There are special programs for veterans and service members, rural residents, some types of first-time home buyers, and others. CFCU also offers low- or no-down payment options, such as FHA, WSDA, and Home Ready. Payment options usually come at increased cost. When you meet with lenders, ask questions and ask to see multiple choices. 

Putting money into your home means it's not available for other things. When deciding how much money to put down, keep in mind that once you put money into your home, it's not easy to get it back out again. If you need the money for another major expense, like paying for college or medical expenses, you may find that there is no way for you to access this money. Borrowing against your equity also isn't free-you pay interest on the loan.