What is a down payment?

A down payment is a sum of money that is paid upfront when purchasing a home in Virginia. This sum is typically a percentage of the total cost of the home (usually between 5-20%) and is paid directly to the lender. The down payment is an important part of the mortgage process since it gives the lender assurance that the borrower is taking the loan seriously and has the financial means to pay it back. In addition, it helps reduce the amount of the loan that needs to be paid back, since the down payment is subtracted from the total loan amount. Lastly, some lenders may offer better interest rates if a larger down payment is made. In Virginia, the laws regarding down payment requirements are similar to other states. Generally, the larger the down payment, the better the terms of the loan and the lower the interest rate. The down payment may also be subject to lender and state-specific regulations. For example, the Federal Housing Administration loans require a minimum down payment of 3.5% of the purchase price while the Veterans Administration loans require no down payment at all. Therefore, it is important to consider all the options available before deciding on a down payment and loan.

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What is a down payment?

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