Mortgage Down Payment Requirements For Conventional Loans

Share Article’s recently featured article helps potential borrowers prepare for their home loan down payments. is a borrower advice website that has become a trusted destination for current news and expert loan advice. The website strives to empower borrowers with first class knowledge, valuable resources and connections to the top rated industry professionals. A new article from the website continues to provide top notch info that can help readers in their loan process with a guide to mortgage down payment requirements for conventional loans.

This new guide 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. Often, a down payment is the biggest hurdle standing between renting and home ownership. If you will be seeking out a conventional home loan, there are a number of things to keep in mind as you consider pulling together funds for your down payment.”

Loan Love states that when it comes to down payments on a home, size does matter. The size of the down payment will impact many aspects of the homeowner’s loan. For example, it will determine whether or not they will need to pay private mortgage insurance (PMI), the interest rate on the loan, and even the types of loans that will be available for them. While the minimum requirements for a loan will vary widely depending on the purchase price of the home and the loan program the buyer will be using, typical home loan down payment requirements for conventional loans range from about 5 percent to 20 percent of the loan amount.

The article says, “There are a number of things to take into account when deciding how large of a down payment you are able to put toward your home purchase. One important consideration is your loan-to-value ratio, which decreases as your down payment increases. This figure represents how much you owe on your house after your down payment is applied. In other words, it’s a percentage that reflects the ratio between your home’s unpaid principal and the appraised value. A lower ratio is favored. The higher your down payment, the lower your ratio will be.”

Lastly, Loan Love gives some advice on how potential borrowers can come up with the funds for a down payment on a home, but cautions, “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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