If you’re in the market for a new home in Needham, you’re also probably thinking of mortgage and down payment.

Buying a home is expensive. You have to produce down payment, you need money for the closing costs, and there are still plenty of sleeper fees involved.

How much money do you need if you are buying a home for sale in Needham?

A home’s location has a significant influence on the home’s price. Needham is an upscale suburban community with some of the most expensive neighborhoods in the country. This community is proud of its affluent residents, many of whom are professionals, entrepreneurs, and business people.

The average listing price for Needham MA  homes for sale is over $1 million. At that amount, you probably have to take a conventional type of mortgage.

Conventional loans are not government insured so they have more strict rules to follow.  They require 20% down payment from their borrowers. If you can’t cough up the 20% because that’s a huge amount, you have to pay the PMI (Private Mortgage Insurance).

What is a normal down payment for a mortgage?

The answer to that question is “It depends on your mortgage lender.” Most mortgage lenders ask for a 20% down payment.

Mortgage loans supported by the FHA accept down payments for as low as 3.5% of the total amount of the home to be bought. Down payment for a conventional loan can be anywhere from 5 - 15%, and you also have to pay for a PMI (Primary Mortgage Insurance).

Is it better to put a large down payment on a house?

If you can afford to pay the 20% down payment, do it. If you can afford to pay more than 20%, go ahead and put down the money as your deposit. The bigger your down payment is, the better.

Your down payment becomes your home’s initial equity. The larger your down payment is, the larger the equity.

How can I get money for a down payment?

If the Needham home you are planning to buy is around the $1 million mark, the 20% is $200,000. That’s a lot of money.

Where can you get that amount? There are many possible sources for your down payment.

You can get it from your own savings. If you’ve been planning to buy a home for some time, you should have also been saving money for that long.

You can use the sale from your previous home to fund the down payment for your new home.

You can also use any grants and gifts from family and employers.

You may also want to consider tapping into your retirement fund, but consult with a financial adviser before doing so.

Sit down and talk with your real estate agent

If you plan to be a homeowner in Needham, years before scouting a home to buy, you should start saving consistently. Buying a home is an expensive endeavor, so you need to save as much as you can.

When you do that, you’ll put down the needed down payment for that gorgeous Needham MA home you wanted to buy.

Ready to start your home buying process? Call me, Sheila Moylan, at 781-559-4057 so we can talk about your needs and wants in a home.