NEFCU Financial Quick Tip: 20% Down Payment Mortgage Myth


Here’s a financial quick tip brought to you by New England Federal Credit Union. Hi, I’m Pat; Mortgage Sales Manager at New England Federal Credit Union. I’m here to discuss the mortgage myth that you need a 20% down payment to buy a home. While you need to be careful when considering a mortgage, there are plenty of responsible lenders like us who want to see you get the home of your dreams and be able to afford it. A big myth about mortgages is that you need a 20% down payment to buy a house. On a $200,000 property, that’s $40,000. It can take people years to save that much money. There’s good news: you can actually get a loan with just 3 – 5% down depending on factors like your credit score, loan program and type of property. The advantages of having less than 20% down is that you could become a homeowner sooner. And it’s a smart idea to keep a healthy amount in your savings account after buying a home to cover emergencies and even anticipated expenses such as maintenance and repairs. But there are some realities that come with it. You will need to pay private mortgage insurance in addition to your monthly mortgage payment. Your home loan will be larger. Also, In order to qualify for a mortgage, your maximum debt-to- income ratio should be 43% or less so a smaller down payment may make it harder to qualify for a loan. So the requirement of 20% down payment is a myth. You have the flexibility and the freedom to start with a smaller down payment. One that works for you and your budget. For more information, call 800-400-8790 or visit nefcu.com

Leave a Reply

Your email address will not be published. Required fields are marked *