Home Buying Tips-Determine How much Downpayment you Need to Buy a House

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Published: 17th January 2011
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Buying a home means having to be prepared with the necessary financial requirements. The foremost of these necessities is the down payment or initial cash out flow. As a determined home buyer, it is assumed that you are ready for this requirement.

On the other hand, how about if you cannot come up with the necessary amount of down payment? First, you must ask how much of a down payment do you really need to buy a home. Regularly in the mortgage industry the required down payment in buying a home is 20 percent of the total value of the property to be bought. However, at present the rumor is that this has been changed. Some say it is now 10 percent, some 20 percent, and some 15 percent. To make it clear the following may guide a home buyer:

If you are buying as an owner occupied home, (this means you will occupy the home yourself), the down payment requirement is 5 percent; this has been the usual rate and it has not been changed. There is a change in some aspect however; if the buyer is a self employed and opting for the self employed stated income program, he or she is required to put up a 10 percent down payment. There are no other changes save in this aspect; the usual is still 5 percent for owner occupied home.

There are some instances where the buyer is buying a second home. In this case, the buyer should be clear with his intention on the second house. If it is intended for use as a second home to live in or for use as vacation house, or if he intends to use it for his work convenience, e.g. if the owner is staying in the countryside and wants to use the second home for his urban residence, then this will be considered as an owner occupied home and the down payment requirement is still 5 percent. However, if you are buying a second home for investment purposes, such as for renting out or for commercial use, then this will be considered a non owner occupied home which means you will not be living in it but other occupants such as renters, then you will be required a 20 percent down payment.

Making it clear how much of a down payment you will have to put up before buying a home is important to avoid financial setbacks in your home buying. Remember, you need 5 percent down payment for owner occupied homes; 20 percent down payment for second home if to be used for investment purposes or commercial use such as renting out, and 10 percent down payment is required if you are buying as a self employed opting to use the self employed stated income program.

Home down payment is one of the most important aspects in home buying before anything else. However, there are several other matters that a home buyer must look into in order to complete your home buying plan. It is advisable to seek some professional opinions before buying a home.

Oceanside Real Estate, 3-Bedroom Houses in Oceanside and Community Pool in Oceanside can give you great ideas on real estate properties for sale.

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