What are the requirements for a down payment?

When buying a home in Virginia, the buyer must usually make a down payment. This is money that’s given up front and is part of the total cost of the property. The amount of the down payment will vary by lender and type of loan. A federal law known as the “Truth in Lending Act” requires lenders to disclose the specifics of any loan, including down payment requirements. This disclosure is used to protect borrowers from unscrupulous or predatory lenders. Generally, a down payment for residential real estate in Virginia is usually a percentage of the total cost of the home. For conventional loans a typical down payment is about 20% of the home’s purchase price. If the loan is more than 80% of the home’s value, it will usually require mortgage insurance. For other types of loans, like Federal Housing Administration (FHA) loans and Veterans Affairs (VA) loans, the down payment requirements can be lower. FHA loans require a minimum of 3.5% down, while VA loans are available with no down payment. When buying a home, it’s important to understand the down payment requirements and to have enough money in savings to cover them. Borrowers should also remember to factor in closing costs, which are separate from the down payment and usually total thousands of dollars.

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