Many lenders tell borrowers to come up with a 20 percent down payment to buy a home, whether it’s a beachfront condo on Marco Island, a luxury estate on the edge of the island, or a Tigertail Beach home with a swimming pool.
But do you really need 20 percent down?
Do You Need to Put Down 20% on a Home?
Some lenders will have no problem lending to you if you haven’t saved up 20 percent of a home’s purchase price. There’s a catch, though: You’ll have to pay for private mortgage insurance, or PMI, and you may be facing higher interest rates than you would if you had a more substantial down payment.
The most notable exception to this policy is the VA loan. If you’re borrowing using your VA loan benefit, which is only available to past and present military service members and a handful of other people, you don’t have to have a down payment at all—and you won’t have to purchase private mortgage insurance, either.
What is PMI?
Private mortgage insurance is a type of insurance for your lender (not you). It protects the lender if you don’t make your house payments and they have to repossess it to sell it for less than the amount you still owe on the loan.
You can’t shop around for PMI. If your lender requires it, you don’t have a choice—it’ll automatically be added into your loan. The rate generally depends on your loan amount, how much of a down payment you’ve provided, the loan term, and your credit score. You’ll pay for it when you write each check for your monthly mortgage payment.
Are You Buying a Home on Marco Island?
If you’re thinking about buying a home on Marco Island, we’d love to help you find one that’s just right for your needs.
Call us at 239.821.7926 or get in touch with us online to let us know what you’re looking for. We’ll start searching right away. In the meantime, please explore our:
- Marco Island homes for sale from $100k to $200k
- Marco Island homes for sale from $200k to $300k
- Marco Island homes for sale from $300k to $400k
- Marco Island homes for sale from $400k to $500k
- Marco Island homes for sale from $500k to $600k
- Marco Island homes for sale from $600k to $700k
- Marco Island homes for sale from $700k to $800k
- Marco Island homes for sale from $800k to $900k
- Marco Island homes for sale from $900k to $1 million
- Marco Island homes for sale over $1 million