How Much Money Do I Need to Buy a Home?

How Much Money Do I Need to Buy a Home?

It might seem impossible to save up enough to buy your first home, but special loans and assistance programs have made buying a home a lot more affordable than you might think.

A Conventional loan requires buyers to pay:

• At least 5% down

• Closing costs that could run up to 2-3% of their mortgage

• “Cash reserves” that will go in an escrow account to pay insurance and taxes

• Utility adjustments

Luckily, there are several types of loans and programs designed to help people short on cash secure a loan to buy their first home.

USDA Rural Housing Program

If you meet income eligibility requirements and are looking to settle in a rural area, you might qualify for the USDA Rural Housing program. The program guarantees qualifying loans, reducing lenders’ risk and encouraging them to offer buyers 100% loans. That means homebuyers don’t have to put any money down, and even the “upfront fee” (a closing cost for this type of loan) can be rolled into the financing.

FHA Loan

Like the rural housing program, the Federal Housing Administration loan isn’t technically a loan – it’s a big insurance program. The FHA insures lenders against loss in case the borrower defaults on the loan. With this insurance, lenders will approve low and moderate income borrowers for 3.5% down mortgages and buyers have lower closing costs.

VA Loan

These loans are guaranteed by the Department of Veteran Affairs. Available to service members and their surviving spouses, VA loans help veterans secure full, 100% financing and eliminate the requirement for mortgage insurance. They do, however, require a “funding fee” that depends on factors like how much you put down and your service history.

Bond Loans

While they’re not available in every area, these loans are guaranteed by money the state or local government has made by issuing bonds to investors. Qualifying low-to-middle-income buyers enjoy lower interest rates, 100% financing and, in some cases, cash to put toward a down payment or closing costs.

Down Payment Assistance

The National Homebuyers Fund offers Down Payment Assistance (DPA) programs that provide buyers with a non-repayable grant to put towards closing costs and the down payment. These grants never have to be repaid, can be for up to 5% of the loan amount AND can be applied to USDA, VA, FHA and Conventional mortgage loans.

Citywide Home Loans makes the loan process simple for first-time homebuyers and will help you find the loan that’s right for you. Visit to learn more about Conventional, FHA, FHA 203k, VA, USDA and CHFA options.