Like many types of loans, mortgages usually require a down payment on signing. This amount can vary significantly, from around 3% on the lower end of the spectrum to as much as 20% or more near the higher end. When should you start saving up?
According to the best first time home buying tips, it’s a good idea to set money aside ASAP. Depending on how much you want to spend on a house, you can deposit a percentage of your paycheck in your bank account every month. Here are a few numbers to keep in mind:
- A 3% down payment on $200,000 is $6,000.
- A 5% down payment on $200,000 is $10,000.
- A 10% down payment on $200,000 is $20,000.
- A 20% down payment on $200,000 is $40,000.
This isn’t a bad thing, since paying money up front means you pay less in the long run. By planning for a larger payment, you have greater flexibility with your budget.
