So, you’re thinking about buying a home, and you’ve found some great options in the $350K range.
That’s awesome!
Homes at this price point can be a fantastic entry point into the real estate market.
But before you get too excited, there’s one big question: the down payment.
You might have heard that 5% down is the norm for mortgages, but there’s a little more to it than that.
Several things can impact how much cash you’ll need upfront.
Are you ready to demystify down payments and determine whether that $350K house is within reach?
Let’s dive in!
Down Payment Basics for $350K House
If you have a good credit score and a steady income that’s easy to verify and plan to live in the house yourself, there’s a decent chance you’ll qualify for that 5% minimum down payment on your $350K home.
So, what does 5% mean in actual dollars?
It translates to $17,500.
That’s a much more manageable number than the down payments required for those million-dollar-plus properties.
But before you start celebrating, hold on a second.
That 5% is only the starting point.
Let’s get into the situations where you might need to save even more for your down payment.
When You Might Need More Than 5%
Let’s discuss scenarios where that 5% down payment might feel out of reach.
There are a few key things lenders look at that can bump up how much cash you need upfront:
Non-Verifiable Income: The Frustration of Freelance: Lenders get nervous if you’re self-employed, a freelancer or your income is difficult to document with things like tax returns and paystubs. It’s harder for them to be sure you have a steady income to handle the mortgage payments. Unfortunately, this often means they’ll ask for a whopping 20% down payment.
Investment Property: The Riskier Rental? Are you Dreaming of turning that $350K house into a rental property? Lenders see investment properties as riskier than homes you intend to live in. Again, that magic 20% down payment figure will likely come up.
Poor Credit Score: Proving your credit score’s reliability is like your financial report card. A score below 600 shows lenders you might have struggled with managing debt in the past. This makes them cautious, and you guessed it – they might require that larger 20% down payment to feel more secure.
Calculating Your Specific Down Payment
Ready to figure out your likely down payment requirement?
Let’s use a quick worksheet to see where you stand:
Your Down Payment Worksheet
Income Verification:
__ Salaried/Traditional (Easy to verify with paystubs, tax forms, etc.)
__ Self-Employed/Freelance (Income is more difficult to document)
Property Usage:
__ Primary Residence (You’ll be living in the house)
__ Investment/Rental (Planning to rent out the property)
Credit Score:
__ Excellent (680+)
__ Good (600-680)
__ Poor (<600)
Now, let’s see what this means:
If you check your salary/traditional income, primary residence, and excellent or good credit score, you could qualify for the 5% down payment.
If you check any other boxes, your down payment requirement will likely be higher, possibly up to 20% of the $350K purchase price.
Important Note:
This is just a guideline.
Each lender has its own policies.
The best way to get a definitive answer is to contact a mortgage broker or lender for pre-approval.
Strategies If You Need a Larger Down Payment
If you discover you’ll likely need more than the 5% down payment, don’t despair!
There are steps you can take to reach your homeownership goals:
- Saving Strategies: Dust off those Budgeting Skills. Take a close look at your spending habits. Even small changes—cutting back on takeout or cancelling unused subscriptions—can add up over time. Set up automatic transfers to a dedicated down payment savings account. Even just $50 a week makes a difference!
- Hunting for Hidden Income: Can you pick up a side hustle, explore freelance opportunities, or even negotiate a raise at your current job? Any extra income accelerates your savings progress.
- Gifted Down Payments: Family to the Rescue? If you’re fortunate to have family members able and willing to help, a gifted down payment could be an option. Be sure to understand the rules and tax implications surrounding this type of financial assistance.
Getting Professional Help
Navigating down payments, mortgage rates, and qualification rules can feel overwhelming – you don’t have to do it alone!
Here’s how different professionals can help:
- Lenders and mortgage brokers: Your Mortgage Experts. Whether you go directly to a bank or use a mortgage broker (who works with multiple lenders), they’re the ones who ultimately determine your down payment amount. They’ll assess your finances, explain the options, and help you get the best possible deal.
- Financial Advisors: The Big-Picture Perspective A financial advisor looks beyond the house. They can help determine if buying a $350K home fits your overall financial plan, considering your debt, retirement savings, and other long-term goals.
Conclusion: How Much Down Payment Do I Need for a $350000 House?
Figuring out down payments for your $350K home might feel complicated, but you’re now armed with the knowledge to demystify the process!
The 5% down payment could be achievable with good credit, verifiable income, and plans to live in the house yourself.
Even if you need a bigger down payment, remember that it’s not a roadblock—it just changes your timeline and savings strategy.
By budgeting wisely, seeking out income opportunities, and getting expert advice, you’ll be well on your way to homeownership success.
