What is the minimum down payment needed to purchase a home?
Having a down payment that meets certain requirements is necessary for many prime lenders. This is the portion of the purchase price that you pay out of pocket. To qualify for a conventional mortgage, you will need a minimum down payment of 20% of the total purchase price of the property.
The larger the down payment, the less your home costs in the long run. With a smaller mortgage, interest costs will be lower and over time this will add up to significant savings.
You can, however, qualify for a high ratio insured mortgage with a down payment as low as 0% – 5%. Most lenders now offer insured mortgages for both new and resale homes with lower down payment requirements than conventional mortgages. Low down payment mortgages must be insured to cover potential default of payment, and their carrying costs are therefore higher than a conventional mortgage because they include the insurance premium.