Demystifying the Down Payment

The thought of buying a home is exciting, but for many, the biggest hurdle seems to be the down payment. It's easy to feel intimidated by the idea of saving up tens of thousands of dollars. The good news? The path to homeownership might be closer than you think, especially with a little help.

What is a Down Payment and Why Does it Matter?

A down payment is the initial amount of money you pay toward the purchase of a home. It's a percentage of the home's price, with the remaining amount covered by your mortgage loan. Lenders see the down payment as your investment in the property, your "skin in the game" which reduces their risk. A larger down payment can have a significant impact on your mortgage, often leading to a lower interest rate and a smaller monthly payment.

For decades, a 20% down payment was considered the gold standard. A major reason for this was to avoid Private Mortgage Insurance (PMI). PMI is an insurance policy that protects the lender, not the homeowner, if a borrower defaults on a conventional loan with a down payment less than 20%. While it adds to your monthly costs, PMI is what makes low-down-payment mortgages possible for many buyers.

Low vs. High Down Payment

Deciding how much to put down is a personal choice that depends on your financial situation. Here's a quick look at the pros and cons to help you decide:

Benefits of a Lower Down Payment:

• Faster Homeownership: The most significant advantage is that you can get into a home sooner. You don't have to spend years saving up a large sum of money.

• More Cash on Hand: Keeping more of your savings allows you to cover other important upfront costs, such as closing costs, moving expenses, and initial home repairs or furniture purchases.

• Financial Flexibility: Having a larger cash reserve provides a crucial safety net for unexpected expenses after you move in.

Considerations of a Lower Down Payment:

• Private Mortgage Insurance (PMI): As mentioned, a down payment under 20% will likely require you to pay PMI, which increases your monthly mortgage payment. However, it's a small price to pay for the benefit of owning a home sooner.

• Higher Loan Amount: A lower down payment means you'll borrow more, which leads to a larger total interest paid over the life of the loan.

Down Payment Assistance Program

Saving for a down payment can be a challenge, and we're here to help. Our special program is designed to make homeownership more accessible and affordable.

With this wonderful opportunity, you can get into your dream home with just 1% down*. Here's how it works: you put down 1% and the lender will contribute an additional 2%, giving you a total of 3% down. This allows you to keep more money in your pocket for other important things, like new furniture, moving expenses, or unexpected home repairs.

This program also offers flexibility, as gift funds can be used for your entire down payment. This means that if a family member wants to help, their contribution can cover the full 1% you need to get started. By using this program, you can start building equity and stop paying rent sooner, all without the pressure of a large upfront payment.

Ready to take the first step toward homeownership?

Don't let the down payment hold you back. Learn more about this limited-time opportunity and submit an inquiry to speak with a mortgage expert who can help you find the right path for your unique situation.

Visit our mortgage page to learn more and get started today!

*Federally insured by the NCUA.The principal, interest and MI payment on a $200,000 30-year Fixed-Rate Loan at 6.375% and 97% loan-to-value (LTV) is $1,307.74. The Annual Percentage Rate (APR) is 6.931% with estimated finance charges of $5,600. The principal and interest payments, which will continue for 360 months until paid in full, do not include taxes and home insurance premium, which will result in a higher actual monthly payment. Rates current as of 08/13/25. UWM pays the lesser of 2% or $7,000 of the down payment. Borrower pays 1% of the down payment (or remaining down payment needed if 2% exceeds $7,000). Subject to borrower approval. Some exclusions may apply. Equal Housing Opportunity.