One of the biggest concerns that prospective homeowners are confronted with along their financial journey is determining how much of a down payment that they will need. The most accurate answer is that it can depend on many different variables such as your credit scores, type of loan program you choose, overall price of home, etc. Although there are 0%-down loans available, a majority of home loans do require specific down payments that can range anywhere from 3.5% up to 20% of the final sale price of the home.
According to the online real estate database company Zillow, the average home price in cities around Virginia was $254,000 as of October 2018. Here’s what you’d have to save for a down payment based upon these figures:
- 3% = $7620
- 5% = $12,700
- 10% = $25,400
- 15% = $38,100
- 20% = 50,800
Empire Today provided an even more in-depth look at just how much you should be saving for a down payment. If you plan to purchase a home in either of these Virginia cities by the age of 30, then you should start saving at least this much per month:
At 22 years old:
- Richmond, VA: $522/month
- Virginia Beach, VA: $469/month
At 25 years old:
- Richmond, VA: $835/month
- Virginia Beach, VA: $750/month
At 29 years old:
- Richmond, VA: $4,175/month
- Virginia Beach, VA: $3,750/month
So, you should save a total of $45,000 by the age of 30 if you want to purchase a home in Virginia Beach VA, or $50,100 for a home in Richmond, VA.
Types of Loans
Regardless of where you plan to purchase your home, your down payment amount will also be dependent upon what type of loan you qualify for. For instance, there are loans that are regulated and insured by the Federal Housing Administration that allow for down payments as low as 3.5%. Then, there are also some options offered by the Virginia Housing Development Authority that are aimed at assisting first-time homebuyers, veterans and even some repeat buyers. Here’re some of these programs:
- Down Payment Assistance Grant (DPA) – Some if its features include 1% down payment, no repayment and a reduced monthly housing payment.
- VA-$0 down payment required for eligible veterans along with 100% financing options.
- FHA-Since it’s insured by the government, homebuyers can qualify for as low as 1% down with VHDA DPA Grant, otherwise it’s a 3.5% down payment.
Even though these programs are tempting because they can get you into homeownership sooner, the benefits of saving for a down payment shouldn’t be overlooked either. Saving 20% or more can translate to lower interest rates, monthly mortgage payments and closing costs.
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