Buying a Home with a Low Down Payment

by Bevin Bermingham on February 15, 2015

When purchasing a home you will typically pay for it using two main sources of money. One is the amount you borrow from a bank (your mortgage) and the other is saving or acquiring the money for your down payment (this is the money you invest into the property). The standard/ideal amount of down payment one would have to buy a home is twenty percent.

With the high cost of homes in New York City, that twenty percent figure can make home ownership seem like a pipe dream. However, there are a few different ways of making up the difference. Many lenders offer Private Mortgage Insurance (PMI), which is an insurance policy you, the borrower, pay for to insure the mortgage lender that you’re not going to default on your loan. PMI comes with it a pretty hefty up front cost and additional monthly payments.

There’s a really great piece about PMI on New York One last week, available at this link.

The New York One post mentioned that 2015 is going to be a great year to buy a home because it is likely that interest rates will begin to rise for the first time in years. Locking in a low mortgage rate, even if doing so means you haven’t saved as much of a down payment as you would have liked, may end up saving you money in the long-run.

If you are a New York State resident and looking to purchase your first home, the State of New York Mortgage Agency offers several first time home buyer programs that you may qualify for, including one for low-income purchasers and folks buying a fixer upper.

Previous post: