Jennifer M. Lee, PhD
How Much Money Do I Need to Buy a Home?
Home buyers ask me all the time how much money they really need to purchase a home.
The answer is always: "That depends..."
Your home price (Affects down payment, due diligence & earnest money)
Down Payment (Loan type, personal preference)
Number/Type of Inspections (Impacted by age of the house)
Area of Purchase (Taxes/Insurance/HOA)
Loan (lending fees, choosing to pay down the interest rate, etc.)
What's My Down Payment Going to Be?
Again, it depends on your loan product. Unless you pay cash for a home, here are your options.
Conventional loan: As little as 3% down (for buyers with best qualifications, i.e. low debt, higher credit scores)
VA loan: As little as 0% down (for military veterans, VA funding fee required, but rolled into the loan)
FHA: As little as 3.5% down (this loan is for buyers with lower credit scores and a higher debt-to-income ratio)
USDA: As little as 0% down (only on eligible homes in specific, rural areas, can take as long as 60 days to close)
Here's a chart to explain when the money flows out (if you're buying an existing home, new construction is a bit different). Pay special attention to Due Diligence & Earnest Money.
(**NC has both Due Diligence and Earnest Money, SC only has Earnest Money, but the 1% anticipated amount is the same.)
HELP IS HERE!
1) Your lender will provide you with a LOAN ESTIMATE to help you understand the fees associated with your particular purchase.
2) I can provide you with a sample CLOSING DISCLOSURE to show final numbers for buyers in your price point.
NOTES ON NEW CONSTRUCTION:
When buying new construction, there is only Earnest Money which can be as little at $1,000 down or as much as the builder requires. The good news with new construction is that the inspections are fewer (if desired) and some builders pay closing costs.
Start early: Reach out to me, I am excited to help you! I can connect you with a great lender and walk you through every step of the process.
Save Money: Start saving money. Shoot for $10,000. We can talk about gift funds, down payment assistance and closing cost assistance programs. Just start saving
Pay down: credit card debt, pay off old smaller debts, and please don't buy a car until after you close.