4 Common Down Payment Myths
Being able to make a down payment is one of the keys to becoming a homeowner. Unfortunately, there are many misconceptions out there that keep a lot of would-be buyers from realizing that they are capable of making a purchase.
With that in mind, Tara Mastroeni, contributing writer for Forbes magazine debunks some common down payment myths below.
Myth #1: You need to put 20% down
For years, putting 20% down was considered the golden rule in real estate. However, fortunately, that is no longer the case. These days, most loan programs – especially government-backed programs like FHA and VA – only require between 3.5% and 5% for a down payment.
That said, if you have the means, making a larger down payment than what’s required can be beneficial. For one, if you put 20% down, you won’t have to pay additional mortgage insurance. For another, putting down a larger down payment can be an effective way to lower your monthly payment overall.
Myth #2: Paying PMI is always smarter than making a large down payment