Down Payment and Closing Costs

Knowing the down payment and closing costs is essential to planning your home purchase well. These are the main upfront outlays you should anticipate.

Down payment

This is the amount you pay upfront when buying. Depending on the loan type, it varies considerably:

• FHA loan: the down payment can be as low as 3.5% of the property's value; ideal for first-time buyers.
• Conventional loan: usually requires between 5% and 20%; with less than 20% you may be required to carry private mortgage insurance (PMI).

Closing costs

These are the expenses tied to finalizing the purchase, on top of the down payment. They typically range from 2% to 5% of the home's price and include:

• Appraisal and title search.
• Legal and loan-origination fees.
• Prepaid insurance and taxes.

Plan with room to spare

Add up the down payment, closing costs, and a cushion for surprises. Having clarity on these amounts prevents surprises and strengthens your position when negotiating.