Arizona is one of the nicest places you could buy a house, and if you are planning on moving here or buying a second piece of real estate, then you may be wondering what the down payment for a House in Arizona is.
If you are planning on moving to Arizona, then you should know that the weather here is nice, there is a relatively good cost of living (less than the national average by about 5%), great healthcare and education, and also a lot of entertainment options. The affordable average down payment for a House in Arizona, thriving tech scene, youthful population, and incredible landscape of Arizona are more reasons for you to want to live here.
Getting a house in Arizona can be quite cumbersome, nevertheless, the hardship can be surmounted if you have a good real estate agent; Tammy is one of such agents.
With decades of experience selling homes in the Grand Canyon State and its environs, Tammy is best suited to get you settled into your new home in almost no time. Call today at (480)-848-7173.
What is a Down Payment?
Let’s face it, hardly anyone has the money to make an outright purchase of a house in Arizona (or anywhere really), and even if they do, many will rather secure a loan that allows them to make only a partial payment for the property at first. In such situations, the option of taking out a loan to purchase the house usually requires a down payment.
A down payment is a statement of intent. This is a portion of cash (usually expressed as a percentage) that is paid upfront in order to finance an expensive purchase – in this case, a house.
When intending to buy a house using a loan, this payment is important in making sure you get approved for the house loan. This is your own contribution to the purchase of the house while your mortgage lenders take care of the rest of the payment. Your down payment increases the trust between you and your lenders. Now you may have gotten to the point where you are wondering how much is down payment for a House in Arizona. We’re about to provide you with information on that. but first, who can even qualify for a loan that permits a down payment?
Who Can Even Qualify for the Loan anyway?
From what has already been stated, you know that a down payment is a requirement for most people seeking a loan to buy a house. In order to be approved for a loan that accepts a down payment, you should have some money saved up from a steady income source and a good credit score.
A good credit score would help your case when lenders are assessing how risky it is to lend to you. In Arizona, a minimum credit score of 580 is required to get the lowest down payment rates. A credit score between 500 and 580 would require a higher down payment.
How Much is the Minimum Down Payment for a House in Arizona?
How much down payment for a house in Arizona? We truly cannot count the number of times this question has come up during a consultation.
A conventional loan requires a minimum down payment of 20% of the value of the house you want to purchase. For example, if $350,000 is the price of the house you want to buy, you would be required to pay $70,000 as a down payment and the rest of the payment would be made through fixed monthly installments over a 15 to 30 year period. A large payment can be made to take care of the purchase once and for all if you become able to afford it.
There are other loan programs you can get that would require lower down payments like the Federal Housing Administration loans which allow you to get a down payment of 3.5% (this requires a credit score of at least 580) or the Veterans Administration loans which allow currently serving military personnel, veterans or the surviving spouses of dead military veterans to apply for mortgages with zero down payment (this usually requires a minimum credit score of 620).
A 20% down payment is usually the traditional target for most people saving up in order to buy a house but for those that can’t make up to the 20% down payment, especially first-time buyers, you would also be required to pay mortgage insurance which is an extra charge monthly. The VA loans do not require these monthly mortgage insurance payments.
What is Mortgage Insurance?
This is a form of insurance policy that protects a mortgage lender from losses should the borrower default on payments, end up dying, or be otherwise unable to meet the agreements of the mortgage.
There are two main forms of mortgage insurance:
- Private Mortgage Insurance (PMI): This is required when you take a conventional loan that allows less than 20% down payment and can be canceled after some time.
- Mortgage Insurance Premium (MIP): This is usually one of the Federal Housing Administration loan requirements. It is paid throughout the length of the loan, and can only be canceled if you refinance.
Frequently Asked Questions
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Can You Buy a House Without a Down Payment?
You can take advantage of some programs that offer zero down payment plans like the United States Department of Agriculture loans or the VA loans. These programs usually just merge the funds required for the down payment into the actual loan amount.
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What Down Payment Plan Should I Opt For?
20% is the gold standard when it comes to figuring out a down payment plan if you look at the big picture. It helps you save more money in the long run. It may seem like a good deal at first, to opt for plans that have down payments below the averages but this would incur more costs especially if you don’t understand the breakdown of the costs.
What next?
You’ve finally found a nice residence in Arizona and figured out your down payment and mortgage plans. You are now a new homeowner so what you have to do is figure out a great plan to pay off the balance without defaulting.