Buying  A Home: Down Payment

The typical magic number for a down payment is 20% of the purchase price. With FHA loans, borrowers can purchase homes with as little as 3% down. Typically, the larger the down payment, the lower your interest rate will be.  Also, if you do put down 20%, you will generally not be hit with PMI (Private Mortgage Insurance) charges. The PMI is an additional fee built into your mortgage payments to protect the lender from default. Generally, the lender will not require this insurance if you put down 20% and/or you will be able to cancel it after you have built up 20% equity in your home.