When you’re in the market for a new home, one of the biggest considerations you’ll have to make is how much you can afford as a down payment.

While you might be more concerned about the number of bathrooms and the finishing in the basement, your down payment today will influence your available rates for home mortgages for years — possibly even decades — to come. Here’s what you should know.

• You have a choice
  There are as many types of mortgages as there are houses on the market. Low rate mortgages, fixed rate mortgages, adjustable-rate mortgages, convertible, intermediate… the list goes on. The kind you want depends on how much you’re able to set as your down payment and how much you’re willing to pay month-to-month thereafter, so speak with local mortgage lenders to find a solution that’s right for your situation.
• There’s a minimum
  Every lender will set their own rates and criteria, but generally speaking, the minimum required down payment is 3.5% to get you a fixed-rate, 30-year Federal Housing Administration (FHA) home loan. A 5% down payment can earn you a conventional loan. But according to Trulia, a 20% down payment is the key to happy rates for home mortgages.
• Your credit matters
  It’s obvious that your credit score will impact your ability to get a loan. Many mortgage lenders require a minimum 680 score, according to the Home Loan Learning Center. The minimum for FHA loans is 620. However, you may be able to offset any eyebrows raised from a poor credit score by making a higher down payment offer.

 

When comparing rates for home mortgages, you’ll be thinking a lot about your future. How much can you afford to pay every month? How many years do you want to maintain your mortgage? How long will you be living in your new home?

Despite these valuable questions, never underestimate the power of now. The more money you are able to use as a down payment on your dream home, the sooner you can call that home your own.

There is a loan system and a mortgage payment out there that’s right for you. Speak with a mortgage lender to learn how your down payments and credit scores can come together to determine a rate that works.