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How Much Do You Really Need for a Down Payment?

If you’re looking to get a mortgage to buy a home in Albuquerque, you’ll probably be saving for a down payment. A down payment is what you put down when you close on a mortgage. Lenders often speak in terms of percentages.

A down payment is what you own initially. The rest, however, comes from your lender.

The standard is frequently referred to as 20%, but is that accurate?

The thought of paying 20% of the purchase price as a down payment may make you feel homeownership is not an option for you, but is that really so?

Here are things to remember when saving for your down payment.

20% Down: The Benefits

There are definitely benefits to placing 20% down on a home loan.

  • You don’t have to buy private mortgage insurance. PMI is protection for your lender if you fail to make payments on your loan.
  • If you don’t put 20% down, but reach a certain equity level, the lender might agree to cancel your PMI.
  • The bigger the down payment you make, the better the interest rates you’ll receive.
  • The more down payment you make, the less of a risk a lender views you as, so you’ll get more enticing terms.
  • Putting down 20% and getting an interest rate that is, for example, two percentage points lower would save you thousands over the life of your loan. The bigger your down payment, the less money you’ll pay monthly.  
  • The real estate market remains competitive despite COVID-19’s economic downturn, and a larger down payment can also boost your chances of being accepted by a seller. If you’re buying in a hot market, that’s important.

20% Down: What’s the problem?

Not every lender requires 20% down, and an increased down payment has some downsides.

You’re leaving yourself with less money, which can be worrying for some buyers. You’re leaving yourself with less money for repairs or updates you might have to buy, and you might have to save years just to get to a 20% down payment.

Can You Buy a Home Without a Down Payment?

It is possible to get a home loan for no down payment, but only with a government-backed loan. These loans are insured by the federal government, so lenders have less risk.

VA loans and USDA loans are two of the most popular government-backed loans that do not require a down payment. VA loans are for service members and veterans, and some surviving spouses. USDA loans may be available for buyers in selected suburban and rural areas.

Does the Type of Loan Matter?

Considering what kind of loan you’re likely to get is important when deciding how much of a down payment to put down.

The down payment requirements for a conventional loan on a primary residence are left up to the lender. For example, you might find a lender that requires as little as 3% down. Some lenders will offer lower down-payment options to better qualified borrowers.

With an FHA loan, you’ll need a credit score of at least 580 to qualify, and a down payment of at least 3.5%.

All this means for potential home buyers that 20% down payment guidelines have pros and cons. You have to figure out what works for you financially and then shop around for loans that align with your needs.

Make sure to join us twice a week on our blog for more real estate advice and great reasons to buy a home in Albuquerque and the surrounding area. Follow us on Facebook for the latest Albuquerque real estate updates. Looking for the perfect home for sale in Albuquerque? Our easy-to-use home search tool can help you start the process. Contact us today to help you buy or sell your next home in Albuquerque.


11721 SKY VALLEY Way NE, Albuquerque, NM 87111  $829,000

6 Bedrooms / 5 Bathrooms (3 full, 2 half) / 4860 Square Feet

Almost 5,000sqft in Prestigious Tanoan East with absolutely INCREDIBLE views!! Enjoy mountain views as you overlook the 6th Hole of Sandia and float in the pristine, HEATED pool, with a lot situated above the golf course for privacy. At night, view the twinkling lights of Albuquerque from your private balcony off the oversized master. Too many amenities to list! With room for everyone, this home boasts a finished basement complete with rec room, bedroom & bath. The luxury kitchen features granite countertops, newer appliances and open floorplan. Beautiful wood floors, oak staircase, 2 gas log fireplaces and more are ready to welcome you home!

Contact the Sandi Pressley team for additional details! 

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Sandi Pressley

Albuquerque New Mexico Real Estate YOUR SOURCE FOR ALBUQUERQUE REAL ESTATE! Sandi Pressley offers unparalleled service to ALL clients in Albuquerque and surrounding communities in the New Mexico real estate market. Sandi's motto is "Putting You First." Your complete satisfaction with our service and representation is our number one priority. As a native of Albuquerque, Sandi Pressley has been dedicated to serving her client's real estate needs for over 45 years. Sandi has achieved a goal unprecedented by any other Realtor of being the #1 Top Producing Realtor for 38 consecutive years in all of Albuquerque as well as the entire state of New Mexico. She is also the #1 Top Producing Realtor for the entire Western Region and 8th in the Nation with Coldwell Banker National. Sandi Pressley serves the entire Albuquerque New Mexico real estate market including the surrounding communities such as Rio Rancho, Placitas, Corrales, Bernalillo, Northeast Heights, North Albuquerque Acres, Sandia Heights, High Desert, Foothills, Four Hills, UNM, Nob Hill, Ridgecrest area, Uptown area, North Valley, Northwest Heights, Paradise Hills, South Valley, Southwest Heights, Bosque Farms, Los Lunas, Cedar Crest, Tijeras, and all East Mountain areas. Whether you are considering buying a home, selling a home or both, we know these areas inside and out.

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