Insights for First-Time Home Buyers, Part 4: Down Payments

by Liza Deckelbaum


Making a down payment on a home is one of the top four concerns that first-time home buyers tend to have. In the final installment of our Insights for First-Time Home Buyers blog series, we’ll cover the basics of down payments and how to determine the best purchasing strategy for your budget.

If you’re completely unfamiliar with the home buying process, we’ve got you covered. 

First, before you even start looking at houses, work with your selected lender to apply for pre-approval. Most sellers are more inclined to negotiate with a buyer that has pre-approval vs. pre-qualification since pre-approval shows that the lender has already reviewed and approved the buyer’s credit.

Very few lenders, such as Coastal, do not require a 20 percent down payment and offers flexible financing of up to 100 percent of your home for those who qualify. The majority of other lenders do not offer this, so make sure you do your research before picking who will manage your mortgage.

So, you’ve got your pre-approval letter. Now, let’s pretend you find your dream house and you’re ready to make an offer.

If you decide to buy a house and put less money down, just know that your mortgage payment will be somewhat higher than if you were to put more money down.

There are benefits to putting 20 percent (or more) down if you can. For starters, you won’t have to pay Private Mortgage Insurance and your monthly mortgage payment will be lower.

Most lenders also require first-time home buyers to have Private Mortgage Insurance. However, Coastal does not require first-time home buyers to have it, saving you hundreds of dollars a year.

Know Your Options

While putting 20 percent down can be good for your mortgage payments, it’s not the only option. Lenders understand that having a lower down payment can help increase a buyer’s ability to afford closing costs, property taxes, and homeowner’s insurance – among other expenses.

Coastal’s first-time home buyers program offers a fixed-rate mortgage of 30 years* or an adjustable-rate mortgage with a lower interest rate that's fixed for seven years.

The team of experts at Coastal are committed to making your maiden voyage into home ownership a smooth passage. Another thing most lenders can’t guarantee is a promise to service your loan locally – but Coastal does.

And, Coastal requires an underwriting fee of just $400* and does not charge for document prep or credit reports, which means more substantial savings for you. Other lenders can often charge as much as $900 or more for underwriting fees.

Even if you aren't a first-time home buyer, all of these amazing benefits may still be available to you if you haven't owned a home for the past three years.

Want more tips before you dive into the process? Check out part one, two and three of our series on the Coastal blog.

If you’re ready to go, start by making an appointment with one of the Coastal mortgage experts near you, or go ahead and apply for a mortgage online. Consultations with Coastal are always free with no obligations.

Happy house hunting!


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*For a $250,000 loan for a term of 30 years with a 4.50% APR, the monthly payment is $1,267.00. Actual payment obligation could be higher due to taxes and insurance, which are not included in this payment example. All loans are subject to approval.