Conventional Home Loan Down Payment Requirements Discussed At

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A new guide from Loan Love takes a look at the down payment requirements for conventional home loans in 2014. is a borrower advice website dedicated to providing information that can help borrowers secure the best home loans and enjoy the most benefits of home ownership. A new article from Loan Love continues to offer advice that can help borrowers by providing a short checklist of conventional home loan down payment requirements.

This new article titled “Conventional Home Loan Down Payment Requirements (Quick Checklist)” says, “If you’re ready to look for that next new home, it’s a good idea to get your financial house in order first. Sitting down with a lender not only helps you understand the qualifications necessary for financing, but also provides you with the opportunity to get questions answered about the entire process, such as conventional home loan down payment requirements.”

Loan Love notes that often the home loan down payment is the biggest obstacle for those who are thinking of taking the step from home rental to home ownership. For those who are seeking a conventional home loan, there are a few things that must be considered when gathering funds for the down payment. The first thing that potential buyers must consider is the size of the down payment. The down payment represents a percentage of the home’s selling price and is paid upfront as opposed to being financed. It is due when the buyer closes on their home mortgage loan.

The Loan Love article says, “The size of your down payment impacts other facets of your loan. For example:

  •     Whether you will need to pay private mortgage insurance (PMI).
  •     The type of loan available to you, including fixed rate or adjustable.
  •     Your interest rate on the loan.

The amount of down payment required depends on a number of factors, but is primarily determined by the purchase price of your new home and the loan program you will be using. Requirements for down payments can vary widely, typically anywhere from 5 percent to 20 percent. Your lender can discuss the different requirements with you as you compare loan programs.”

The conventional home loan down payment requirements guide further notes that there are a number of important factors to take into account when deciding how big of a down payment to put down on a home, notably the buyer’s loan-to-value ratio. This is a percentage that reflects the ratio between the home’s unpaid principal and the appraised value. A lower ratio is favored. The higher the down payment, the lower the ratio will be.

Loan Love ends by giving some advice on where to find other sources of down payment funds. It says, “If you don’t currently have enough cash in your bank account to make the amount of down payment necessary for your loan program, you have probably already begun considering other sources, such as borrowing from family or close friends. Your real estate agent can also be an invaluable resource for helping you pull together the down payment. He or she may know about sate and local housing incentives that are available to you, as well as special loan programs or grants.”

The article continues, “Before counting on these sources, however, it’s wise to check with your bank, credit union or mortgage broker to be sure the source of your down payment is still in compliance with loan rules. One more word of caution: before pulling money out of a retirement account to cover your down payment, talk to your tax advisor. Be aware of any and all penalties that will come your way should you go this route.”

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Kevin Blue
Loan Love
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