How much Down Payment can you invest?
Down payment %
| Credit Score |
20% |
15% |
10% |
2-5% |
| 700+ |
8.50 |
8.50 |
9.25 |
10.25 |
| 651 - 700 |
8.75 |
9.25 |
10.25 |
10.50 |
| 600 - 650 |
9.25 |
10.50 |
11.00 |
11.75 |
| less than 600 |
10.75 |
11.25 |
12.00 |
12.50 |
|
Rates are subject to change.
Why does Down Payment affect Interest Rate?
A lender is seeking evaluate your financial stability. The less stable your finances, the higher risk the lender faces in loaning money to you and the higher interest rate they will charge.
Your ability to save up a down payment indicates that:
• you are not living on the brink of financial disaster.
• you are making a sizeable investment in the home--thus you are more likely to do what is needed to protect that investment, i.e., take care of the home and resell it.
• you make enough money over and above your basic living expenses that you will have the money to handle repairs and maintenance of the home.
• you make enough money over and above your basic living expenses that you will be able to handle other incidental expenses that may arise, such as car repair.
So, not only does a down payment increase the amount you have invested in the home, --money you presumably don't want to loose, but, along with your credit score, it gives the lender a measure of your financial stability and ability to repay the loan.
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