We know the homebuying process can seem complicated, but if you understand what you need to know before you buy a home, you can feel confident in your journey. Here's another Mortgage Tip with Wells Fargo. Making a down payment. Knowing what your down payment will be before you buy is an important first step. It prepares you for your monthly mortgage costs and find a home you can afford. To begin, let’s answer the following questions: What is a down payment? How much is typically required? And what are the benefits of a higher down payment? A down payment is the sum of money you pay upfront to cover the difference between the home's price and the amount you borrow. The amount you put down can vary and affect the financing options you will have. Typically, down payments are between 3% and 20% on a fixed-rate loan. With a low down payment, mortgage insurance will be required. Mortgage insurance is an insurance policy that lets you make a lower down payment by insuring your lender against loss if you fail to pay your mortgage. You'll need to keep in mind that the mortgage insurance will increase the cost of the loan and will increase your monthly payment. Finally, there are benefits if you can afford to put down a larger down payment. Buyers who make a down payment of 20% or more are likely to receive a lower interest rate. This saves you money over the life of the loan and lowers the amount you pay each month in principal and interest. To put it simply, the more money you have available for a down payment on your home, the less you’ll have to borrow. You may be eligible for down payment assistance programs or other low down payment lending options like our Dream. Plan. Home. mortgage SM , an FHA, or a VA loan. Talk with one of our home mortgage consultants about loan amount, type of loans, property type, income, first-time homebuyer, and homebuyer education requirements to determine eligibility. Now that you know the role your down payment plays in your home buying journey, we hope you feel ready to explore all your options. CTA: Start today by visiting our website and using tools like our affordability calculator to determine your financial options. Discover how we can help make your dream of owning a home a reality.

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