When you buy a new home, you may need to make a down payment. This is a percentage of the home’s purchase price that you pay upfront.

You probably have a lot of questions about down payments and how they work. In this two-part series, we are answering some of those questions. Be sure to check out Part 1 if you have not already. Then, read on in this post to discover the answers to a few more frequently asked questions about down payments.

Common Questions Regarding Down Payments

Q: Do I really need a 20% down payment?

A: You may or may not need to put 20% down to buy a home, depending on your financial scenario and the type of mortgage for which you are applying.

There are multiple mortgage products that allow for down payments lower than 20% with suitable qualifications.

Q: What is the lowest down payment for a home?

A: The lowest down payment for a home is actually zero down payment. But to qualify to buy a home with no down payment, you must be eligible for a mortgage program that features zero down. Examples include VA mortgages and USDA mortgages.

VA mortgage are available to qualifying veterans, active-duty service members and eligible surviving spouses. USDA loans are income-based, and may be an option to homebuyers who are purchasing homes in rural areas.

Q: What if I cannot afford a down payment?

A: This scenario is more common than you might realize. But you might still be able to purchase a home without waiting. If you cannot afford a down payment, the first option is to see if you qualify for a type of mortgage that features no down payment.

Another possibility is to apply for down payment assistance. We can help connect you to down payment assistance programs in your location. Down payment assistance in combination with a mortgage type that features a low down payment might also work.

Buy a Home with an Affordable Down Payment

If you read both parts in this series, you should be much better informed about down payments than you were before.

Should you have additional questions about down payments with respect to your individual borrower scenario, those are questions we can address during your consultation.

Whatever your situation, we will work hard to help you purchase a home affordably. Please call MMS Mortgage Services at (248) 788-0800. We can help you with home purchase or refinance in Michigan or 15 other states.

Many of the questions we receive from homebuyers concern down payments. This is not a surprise; knowing you need to pay a chunk of money upfront to buy a home may seem daunting. But the world of down payments is one with a lot more flexibility and affordability than many prospective homebuyers realize. In this two-part series, we will be answering some pressing questions you may have about down payments.

Downpayment FAQ’s

Q: How much of a down payment do I need?

A: The most pressing question you probably have about down payments is how large a down payment you personally need to make to buy a home.

The answer to that question depends on a variety of factors, such as:

• Your credit score
• Your debt-to-income (DTI) ratio
• Your income and assets
• Your veteran status
• Where you are purchasing a home
• What type of mortgage you are applying for

One borrower might need 20%. Another might need 10%. Still another might need 3.5%, and so on. During your consultation, we can help you determine the down payment amount you will need.

Q: What are the pros and cons of large vs. small down payments?

A: Even if you can make a small down payment, that does not always mean it is the best option for your financial scenario. Making large and small down payments both have pros and cons.

If you make a large down payment, that will reduce the liquidity of your finances, tying up more money in your home. But on the flip side, if you put down enough, it may get you out of paying for mortgage insurance. You also will be closer to paying off your home loan, which can reduce the interest you will pay over the lifetime of your loan. Plus, your rate may be lower thanks to the larger down payment.

Q: Can I use gift money for my down payment?

A: Yes, in fact, it is very common to use gift money for a down payment. It is important to document where the money came from carefully to ensure that you are allowed to use it for this purpose.

Get Answers to All Your Down Payment Questions

You now have answers to some questions you may have had about down payments. But you probably still have additional questions. During your consultation, we can answer all of your questions about down payments in-depth. To begin, please contact MMS Mortgage Services at (248) 788- 0800. We can help you buy a home or refinance in Michigan or 15 other states.

Perhaps you are about to embark on your journey as a first-time homeowner, and you are already thinking about the future. Or maybe you are at retirement age now, trying to decide whether to stay in your home or sell it. Either way, knowing the many benefits of owning a home while you are retired can help you decide what path you want to take. Let’s take a look at a few chief advantages.

 Benefits to Owning Your Home

1. No rent payments. Let’s discuss the most obvious benefit of owning a home in retirement first, which is that you do not have to pay rent. Rent costs hundreds or even thousands of dollars a month, depending on where you live. It is not an investment, just money that goes to lining a landlord’s pockets. Having to deal with that in retirement is not something you want, especially as inflation can keep driving rents upward while your income remains fixed. Living in your own home can help you avoid those ballooning costs. Plus, if you finish paying off your home, you do not have to make any more mortgage payments either.
2. You can take in tenants. Speaking of living on a fixed income, maybe you will find yourself looking for a simple way to make some more money while you are retired. One common practice is to take in paying tenants. This is something you might not be able to do if you did not own a home.
3. A reverse mortgage can supplement your retirement income. A different way to supplement your income during retirement is to take out a reverse mortgage. This option becomes available once you meet the minimum threshold for equity in your home. Reverse mortgages are extremely flexible, since you can use them any way you choose. They do not come due until a maturity event like the sale of the home or the death of the last borrower. This makes them very affordable. Without owning your own home in retirement, you do not have the option of this form of financing.
4. You can enjoy your retirement to its fullest in comfort. As the saying goes, “There’s no place like home.” Renting simply is not as satisfying as owning a home that you can decorate and customize all you want. Since these are the retirement years you worked hard for, you deserve to experience them where you feel most comfortable.
5. You have more money available to do other things. Speaking of enjoying yourself, think about all the money you are saving when you do not have to pay rent. If you are done paying off your mortgage, you can use that money for other purposes. Put it into savings to increase your financial safety net and give yourself greater peace of mind, or spend it on something you care about like upgrading your home, paying for a grandchild’s education, or going on a trip.
6. Your heirs can inherit your home. Owning a home gives you something of substantial material and sentimental worth that you may pass down to your heirs someday. Just as your home brought tremendous value to you, so it can do for your heirs. That said, keep in mind that if you take out a reverse mortgage, that can affect your heirs. They will need to pay it off if they want to keep the home.

Buy a Home or Refinance in Farmington Hills

Buying a home of your own is an excellent investment in your future. During your retirement years, it can help provide financial stability and emotional comfort.  MMS Mortgage Services can help you buy a home with a flexible loan that will fit your needs now and over the years to come. If you already own a home, but your current mortgage no longer is working for you, we can help you refinance so you can stay in your home affordably. To schedule your consultation, please contact MMS Mortgage Services at (248) 788-0800. We can help you buy a home or refinance in Farmington Hills