May 10, 2023 | By Shoshana Simones
If you're eyeing a $350,000 house, you should anticipate putting down up to 20% or $70,000. However, there are other expenses and factors to determine just how much cash you'll need to put down to secure your dream home.
At Texas United Mortgage, we’ve helped thousands of customers secure home loans. We’re here to help you plan and understand what goes into your down payment.
What You're Actually Paying When You Buy a House
Let's take a quick look at what you're actually paying for when you buy a house. Beyond the sticker price, you'll also need to cover things like closing costs, property taxes, and insurance.
“Closing costs, depending on the loan program you use, will typically amount to between 2-3% of the sales price,” shares Reef Mehri, Branch Manager at Texas United Mortgage.
“However, what people may not realize is that these expenses can be paid by a third party, such as the seller, the lender, or even the realtor. While there are limits, a smart lender can help their buyer write a contract that maximizes credits and expenses to their benefit.”
What is an Earnest Deposit?
Once you've found a house you love and are ready to make an offer, you'll need to put down an earnest deposit to show the seller you're serious. The amount of this deposit varies but is typically around 1-2% of the home's purchase price.
But don’t worry! Once your home transaction is complete, the Earnest Money will be credited toward your down payment.
What is the Down Payment Percentage?
The down payment is the amount of money you pay upfront when purchasing a home. The percentage you'll need to put down can vary, but a common rule of thumb is 20%.
However, the exact amount or percentage will depend on your credit score and the loan type.
Here’s a quick reference guide to some common loan types:
- Conventional Loan: A conventional loan is not backed by the government and typically requires a down payment of at least 3-5% of the home's purchase price. However, if you put down less than 20%, you may be required to pay for private mortgage insurance (PMI).
- FHA Loan: An FHA loan is insured by the Federal Housing Administration and typically requires a down payment of 3.5% of the home's purchase price. This type of loan is often popular with first-time homebuyers who may not have a large down payment saved up.
- VA Loan: A VA loan is available to active-duty service members, veterans, and eligible surviving spouses and does not require a down payment. However, there may be other fees associated with this type of loan.
- USDA Loan: A USDA loan is available for homes in rural areas and typically requires no down payment. However, there are income limits and other requirements for this type of loan.
Average Down Payment on a $350,000 Home
While a 20% down payment is ideal, it's not always feasible for everyone. The good news is that there are other options available. Depending on the loan type, some lenders offer loans with lower down payment requirements, such as 5% or 10%. For qualifying buyers, FHA loans require just 3.5% down.
“We tell buyers to assume that the down payment for a conventional loan is 5%, but some will qualify for less,” says Mehri. “And of course, the down payment for an FHA loan is lower at 3.5%, while VA and USDA loans could be 0%.”
However, keep in mind that a lower down payment typically means a higher monthly mortgage payment and potentially higher interest rates. That’s where working with a local, experienced lender becomes important. You want someone who will help you find the best loan for your specific needs.
“If you want the benefit of paying down your mortgage with a down payment but need help to come up with the funds, Texas has some great options. There are down payment assistance programs that are income-specific by the Texas county you’re buying the home in.”
This is where working with an experienced, local lender comes in handy!
How Interest Rates Impact Down Payments
You may have been hearing a lot about interest rates on the news. Well, they can have a significant impact on your down payment.
“Builders are putting money toward closing costs to help buy down rates to motivate buyers,” shares Mehri. “But sometimes the smarter move is to use those credits to cover closing costs or down payments instead. It’s all about using your money and credits wisely to maximize your long-term benefits and goals.”
When interest rates are low, you may be able to afford a larger down payment since your monthly mortgage payments will be lower. On the other hand, when interest rates are higher like they are right now, you may need to put down a smaller percentage to keep your monthly payments affordable.
To find out what types of loans you qualify for and what down payment funds you should prepare, reach out to Texas United Mortgage today! We can help get you into a home that works for your budget.
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FAQs
Putting down the standard 20% can help you avoid paying mortgage insurance and interest and could save you thousands of dollars. So you can expect to pay between $10,500 an $70,000 as a down payment on a $350,000 purchase.
How much down payment on 350K house? ›
The median downpayment on a home is 13%, but if a buyer wants to avoid fees, including private mortgage insurance, they may have to put at least 20% down. If a buyer puts 20% down and takes out a $350K mortgage, they're likely putting down around $87,500.
How much should I make to afford a 350K house? ›
Following the 28/36 rule, a guideline many mortgage lenders use to gauge how much you can afford, you'd likely need to earn at least $90,000 per year to afford a $350,000 house without spreading yourself too thin. Keep in mind that figure does not include upfront payments, like your down payment and closing costs.
What is a good down payment on a $300000 house? ›
Expect to pay between $10,500 and $60,000 as a down payment for a loan of $300,000. While the suggested average down payment for a $300,000 home is 20%, many people put down less than this. The down payment calculator can help you plan your savings and budget to put down the smallest amount possible.
What is a good down payment for a $400000 house? ›
20% down payment options
Putting down 20% of the home's purchase price is a traditional and ideal down payment option. For a $400,000 home, a 20% down payment would be $80,000. This option may help you avoid private mortgage insurance (PMI) and can lead to more favorable loan terms.
What credit score do I need to buy a 350k house? ›
To buy a house with a conventional loan, for example, you'll need at least a 620 credit score. But don't worry. Even if your credit score hovers somewhere in the 500 – 600 range, you can still secure a home loan. While every lender is different, knowing your score and how it may impact your loan application is key.
What credit score is needed to buy a house? ›
The minimum credit score needed for most mortgages is typically around 620. However, government-backed mortgages like Federal Housing Administration (FHA) loans typically have lower credit requirements than conventional fixed-rate loans and adjustable-rate mortgages (ARMs).
How much house can I afford if I make $36,000 a year? ›
On a salary of $36,000 per year, you can afford a house priced around $100,000-$110,000 with a monthly payment of just over $1,000. This assumes you have no other debts you're paying off, but also that you haven't been able to save much for a down payment.
How much house for $3,500 a month? ›
A $3,500 per month mortgage in the United States, based on our calculations, will put you in an above-average price range in many cities, or let you at least get a foot in the door in high cost of living areas. That price point is $550,000.
How much house can I afford on 40k a year? ›
How much house can I afford on 40K a year?
| Annual Salary | $40,000 | $40,000 |
|---|
| Mortgage Rate | 7.287% | 7.287% |
| Home Purchase Budget (25% monthly income on mortgage payments) | $103,800 | $114,900 |
| Home Purchase Budget (28% monthly income) | $109,500 | $127,600 |
| Home Purchase Budget (36% monthly income) | $141,100 | $159,300 |
4 more rowsMay 10, 2023
What credit score is needed to buy a $300K house? The required credit score to buy a $300K house typically ranges from 580 to 720 or higher, depending on the type of loan. For an FHA loan, the minimum credit score is usually around 580.
How much income do you need to qualify for a $300,000 mortgage? ›
With a 5% down payment and an interest rate of 7.158% (the average at the time of writing), you will want to earn at least $6,644 per month – $79,728 per year – to buy a $300,000 house. This is based on an estimated monthly mortgage payment of $2,392.
What credit score is needed to buy a $400k house? ›
Minimum Credit Score: 620
Suppose you can put 20% down on your $400k home and are otherwise able to qualify for a conventional loan. In that case, you'll probably get some of the lowest monthly payments available – apart from perhaps a VA mortgage.
How much is a down payment on a 350k house? ›
If you're eyeing a $350,000 house, you should anticipate putting down up to 20% or $70,000. However, there are other expenses and factors to determine just how much cash you'll need to put down to secure your dream home. At Texas United Mortgage, we've helped thousands of customers secure home loans.
What income do you need to buy a $400,000 house? ›
The primary factor is your income — a $400,000 purchase typically requires a salary of at least $106,000. Other important considerations include your credit score, the size of your down payment and the details of your mortgage loan, including the interest rate.
How much do I need to make to buy a $300k house with an FHA loan? ›
Following the 28/36 rule, you should make roughly triple that amount to comfortably afford the home, which is $72,000 annually. Keep in mind that these calculations do not include the cash you'll need for a down payment and closing costs.
How much income do you need to buy a $400,000 house? ›
The annual salary needed to afford a $400,000 home is about $127,000. Over the past few years, prospective homeowners have chased a moving target: homeownership. The median sales price of houses sold in the U.S. stood at $417,700 in the fourth quarter of 2023—down from a peak of $479,500 in Q4 2022.
How much is a monthly payment on a 300k house? ›
On a $300,000 mortgage with a 6% APR, you'd pay $2,531.57 per month on a 15-year loan and $1,798.65 on a 30-year loan, not including escrow. Escrow costs vary depending on your home's location, insurer, and other details.
How much house can I afford with $10,000 down? ›
If you have a conventional loan, $800 in monthly debt obligations and a $10,000 down payment, you can afford a home that's around $250,000 in today's interest rate environment.
How much house can I afford with $20,000 down? ›
$1,400 per month qualifies to borrow a loan amount of $204,913; add your $20,000 down payment to this, and you can purchase a home of $224,913.
