Planning Your Path to Homeownership
For most first-time buyers, the down payment is the biggest hurdle. A 20% down payment eliminates private mortgage insurance (PMI) and gives you a lower monthly payment, but FHA loans let you get in the door with as little as 3.5% down. The right target depends on your timeline and local market — saving 3.5–5% and buying sooner can make sense if home prices are rising faster than you can save.
Beyond the down payment, budget for closing costs (typically 2–5% of the loan amount), moving expenses, and an emergency fund. Some states offer first-time homebuyer assistance programs with grants or low-interest second mortgages — check your state housing finance agency's website for programs in your area. The mortgage estimate shown uses a 7% interest rate for illustration; actual rates vary.
Frequently Asked Questions
Private Mortgage Insurance (PMI) is required on conventional loans when your down payment is less than 20%. It typically costs 0.5–1.5% of the loan annually. Once your equity reaches 20%, you can request PMI removal.
Yes — many states offer down payment assistance grants, forgivable loans, or matched savings programs for first-time buyers. The federal Home Possible and HomeReady programs offer 3% down with reduced mortgage insurance. Check with a HUD-approved housing counselor.