Deciding how much money to use as a down payment can be perplexing. Luxe Lending, LLC is here to assist. The best approach for each buyer or investor varies based on their individual circumstances and preferences.

Low Down Payment Options

FHA Loan

• Allows purchase with as little as 3.5% down payment.
• Requires mortgage insurance for down payments less than 20%.

USDA Loan

• Suitable for rural and suburban markets.
• Requires no money down but has household income limitations.

VA Loan

• Available for military veterans with no money down.
• Provides up to 100% financing for qualified personnel.

Non-Conforming Mortgage Programs

• Offer 80/20 set-ups for a second mortgage to cover the 20% down payment.

How Much Should I Use for a Down Payment?

• Consider costs and benefits of each option.
• Discuss your plan with a professional.
• Consult our loan specialists for a customized solution fitting your needs and budget.

Cost of a Lower Down Payment

In low or no down payment programs, two primary costs lead to higher monthly payments: higher interest rates and higher mortgage insurance premiums. Mortgage insurance can be eliminated once sufficient equity is built up, allowing for refinancing to remove it.

Benefits of Lower Down Payments

Despite the drawbacks, there are advantages to lower down payments. These include having less money out of pocket at the time of purchase, a higher rate of return on property appreciation regardless of the down payment percentage, and the opportunity cost of potentially earning more by investing available cash elsewhere.

Personal Consideration

It’s crucial to carefully consider the amount you wish to put down. While your lender may qualify you based on your income, it’s essential to assess what you feel comfortable paying monthly. Ultimately, you must decide what you can afford. Discuss your individual situation with your loan officer at Luxe Lending, LLC to determine the best approach for you.