How much money is needed to buy a house?

It’s a question often asked – how much money is needed to buy a house? It’s not just a matter of what the monthly payment will be. You also need to know how much you’ll need for the down payment and closing costs.

Contacting a loan officer is an important first step you will need to take when making the decision to buy a home since there are many options available. Discussing your situation with a loan officer is the best way to be able to make your plans.

COMMON FINANCING OPTIONS:

FHA, VA and USDA loans
Rural Development loans
Fixed- and adjustable-rate loans
Construction to permanent financing
Renovation loans
Jumbo loans
Condominium loans

Low down payment options:

FHA financing may be a good option if you are a first time home buyers. It allows for a 3.5% down payment but does have an up-front fee plus a fee for insurance is added to the monthly payment. Qualifying can be less stringent since this is a government insured loan.

VA financing is only available for home buyers who served in the military and requires no down payment. There is an upfront fee and monthly insurance premium added to the payment. This is an excellent option if you served in the military and don’t have much saved for your down payment.

Rural Development (USDA) financing allows for 0% down, but is only available in areas that are considered “rural”. In our area, there are some locations in south Oconee County but more properties that qualify are in Madison and Oglethorpe Counties.

Other financing options:

Conventional fixed and adjustable rate loans: These range from a required 5-20% down payment. With interest rates at an all-time low, most borrowers are choosing a fixed rate, but there are times that an adjustable rate could be beneficial. This option may be advantageous to a buyer who is only planning to stay in the home for a few years. The main benefit of conventional financing is avoiding the private mortgage insurance (PMI). Private mortgage insurance covers the mortgage company if the borrower defaults on the loan.

Construction to permanent financing: A construction loan is a short-term loan to get your new home built. When it’s complete, the lender will convert the loan to permanent financing. After a home is complete, there is no requirement to remain with the same lender for permanent financing, so you should shop around for the best interest rate and terms.

Renovation loans are available if you already own your home. However, if renovations are needed when you buy a home, FHA-203K financing may be a good option. The lender will recommend approved contractors who will give prices for the repairs. The repairs will be made within a certain time after closing and contractors paid. The amount paid out will be added to the loan.

Jumbo loans are offered at a slightly higher interest rate for homes priced at $424,100 or above.

Condo loans have different guidelines based on the number of owner-occupants in the condo complex.