Buying a home in Texas is exciting. It’s also one of the major decisions a person will make in their adult life. Choosing from one of the home loans houston tx is also just as important than choosing the right house. Putting a twenty percent down payment on a home loan has its advantages. Unfortunately, saving the twenty percent can be a bit of a challenge. For instance, if a house costs $227,000, the twenty percent could be more approximately $45,500.

The Twenty Percent Down Payment Guidelines are Based on Fannie Mae and Freddie Mac

Government-sponsored companies Freddie Mac and Fannie Mae guarantee most of the U.S. home loans. They determined that a twenty percent down payment or paying for mortgage insurance makes a home loan less risky for lenders. It’s important to note that not all home loans are guaranteed by one of the government-sponsored companies. Some lenders require their own down payment percentage. This means a homebuyer may be required to pay less than the twenty percent down payment. Also, some federal and private programs require little to no down payment for a home loan. For example, federal programs for rural borrowers and military veterans may not require any down payment. This means that they can make a down payment on their new home loan but are not required to make one.

Choosing the Right Down Payment to Make

Many homebuyers can’t afford to make a twenty percent down payment because of other financial obligations. There are two factors to consider when deciding about how much money to put down on a home loan. First, a homebuyer must determine how much money they have available for all upfront home costs. Gather documents like investment and savings statements This will provide the homebuyer with an accurate amount they have for an upfront cost. Remember the upfront costs are different from the costs a homebuyer may need to save for like emergency savings to pay for critical home maintenance issues. Second, consider different home loan options. There may be options that don’t require a homebuyer to pay as much money in a down payment. This means asking multiple lenders about various home loan options. A homebuyer should be able to determine if they can afford a twenty percent down payment. If they can’t, they may be able to make a small down payment on their home.

Saving the Twenty Percent for a Home Loan is Possible

There are benefits of saving for a twenty percent down payment. For example, the home loan payments are lower each month. The homeowner borrows less money. In the earlier example, the twenty percent down payment would be deducted from the $227,000 home loan. Another benefit is the homeowner starts with more equity in their home. This protects them if the value of their home decreases. If a homeowner can’t save the twenty percent down payment, they should save as much as possible.