How much is the down payment for a house in Oregon?

Buying a house is exciting, whether you’re a first-time homeowner, expanding into a larger area, or downsizing. Still, the procedure can be stressful and complex, especially if you’re just starting to look at properties for sale. Determining your down payment amount (and the factors that influence it) will help you avoid financial blunders and maximize the value of your purchase.

What is a down payment?

A down payment is the initial upfront payment for the purchase of a home and is required for most mortgages. After you make your down payment, your loan balance will be divided into reasonable monthly mortgage payments, usually for 15 or 30 years. When deciding on a down payment, you should examine your financial status, lending possibilities, and mortgage insurance.

How much money will you need to pay at closing? More specifically, how much down payment for a 500k house are you required to make when applying for a mortgage to purchase a property in Oregon?

Down payments and closing fees are major concerns for many first-time home purchasers in Oregon. It’s easy to see why: computations differ from person to person.

Many purchasers may assume they do not have enough money for a down payment. However, the typical down payment for first-time buyers in Oregon may be smaller than you realize.

Here’s the average down payment for Oregon first-time buyers in 2024.

Why are down payments required?

Before we discuss how much of a down payment you may expect to make when applying for a home loan in Oregon, let’s talk about down payments in general.

When you apply for a mortgage, you will need to provide a lump sum of money first. These money will be applied toward the buying price of the home. The remaining funds must be financed through a down payment.

The bigger your down payment, the less risky you are to your lender, increasing your chances of being approved for a mortgage with better conditions.

However, if you simply put down the minimum down payment, you will be at a bigger risk because you would have to borrow a larger percentage of the home’s worth. As a result, you may have fewer chances of getting a mortgage with better terms.

However, if you work with the proper mortgage provider, you may be able to get approved for the right mortgage program without having to pay more money upfront than you can afford.

The average down payment for first-time buyers in Oregon

There is no official source that measures the average down payment required by first-time homebuyers in Oregon. However, we can get relatively close by comparing (A) current home prices in the state and (B) the national average down payment % among first-time buyers.

According to Zillow, the current median home value in Oregon is around $483,390, as of January 2024. Let’s use that amount to calculate the average down payment for first-time buyers in Oregon.

So, how much down payment are first-time buyers need to make in Oregon? The answer varies from buyer to buyer, but a recent survey provides some insight into the typical down payment. According to a poll done by the National Association of Realtors (NAR), 60% of first-time buyers make a 6% or lower down payment.

Using the Oregon median home value of $483,390, a 6% down payment would be around $29,003.

Remember, the dollar numbers are based on average home values, which represent the market’s middle. As a result, a more expensive home purchase would necessitate a larger down payment, whereas a lesser priced home would necessitate a smaller down payment.

How Much Should You Put Down on a House?

The size of your down payment is determined by the purchase price of your house and the loan package you choose. varying mortgage loans need varying percentages, and your debt-to-income ratio, credit score, and the loan-to-value ratio of the home are three of the most important elements that mortgage lenders evaluate when extending credit to a homebuyer.

According to the National Association of Realtors® (NAR) 2023 Profile of Home Buyers and Sellers Report, the average down payment for first-time buyers is 8%, the highest level since 1997. For repeat buyers, the average down payment was 19%. According to the survey, many first-time buyers rely more on financial assets to ensure their down payments. This includes investing in stocks and bonds, as well as cryptocurrency, IRAs, and 401K or pension plans.

Do You Need to Put 20% Down on a House?

No, most traditional mortgages allow you to put down as little as 3%. Traditionally, the usual down payment for a property was 20%. While many homebuyers still put that much down, lenders only require 20% for private mortgage insurance (PMI) on conventional loans. Today’s typical down payment is substantially lower, so you don’t have to put 20% down if you don’t want to or if it isn’t financially beneficial. Both sides of the coin have advantages and disadvantages, and weighing the two will help you decide what is best for you.

Pros and Cons of Putting 20% Down on a House

Pros:

• Removes private mortgage coverage: A greater down payment allows you to avoid paying this additional fee.
• Secure a lower interest rate: With a 20% down payment, you may often negotiate a better mortgage rate with the lender.
• Reduced monthly payments: A larger downpayment means you borrow less overall, making your monthly payment more bearable.
• Leverage in a competitive market: The housing market can be competitive, with many markets having more buyers than available inventory. Making a larger down payment will likely give you an advantage in a bidding war.

Cons:

• Delayed homeownership: Saving for a 20% down payment can be a hard and tedious process. Sometimes it takes years to accumulate enough money.
• Could deplete savings: Putting down such a huge sum of money makes you exposed in the event of an emergency or money saved for other financial goals.
• Less money for home-buying expenses. Stretching to make a larger down payment may require you to spend funds intended for home improvements, maintenance, or substantial purchases such as furniture.

Does your credit score affect your down payment?

Yes. Your credit score has a direct impact on whatever loan program you qualify for and the interest rate on your loan. It may also have an impact on the amount of down payment required by the lender. Lower credit scores limit the amount of money you can borrow, perhaps leading to higher interest rates. Before you start the home-buying process, review your credit report to gain a clear picture of your financial situation. Ensure that any information provided by lenders or creditors is correct and up to date.

Loan types and minimum down payment requirements

Your down payment will be determined by the sort of mortgage you intend to apply for when you buy a property. The loan options and minimum down payment requirements are listed below to assist you in determining which house loan is most suited to your needs and the sort of home you can afford. When you browse listings on homes.com, each one contains a mortgage payment calculator to help you calculate your monthly payments.

Down Payment Requirements by Loan Type:

• Conventional loan: 3%
• USDA loan: 0%
• FHA loan: 3.5%
• VA loan: 0%
• Jumbo loan: 5-10%

1. Conventional mortgages

Conventional house loans are the most prevalent sort of mortgage. As previously stated, a traditional mortgage allows you to acquire a property with as little as 3% down payment. You also need to have a credit score of at least 620. With a traditional loan, a down payment of less than 20% requires you to obtain private mortgage insurance.

A conventional loan allows you to pick between a fixed-rate and an adjustable-rate mortgage (ARM). A fixed-rate mortgage, on the other hand, locks in a certain interest rate for the duration of the loan. An ARM will have a low introductory interest rate for the first three to ten years. After that, the interest rate will vary based on the index rate (the interest rate that lenders use for ARMs) and any additional percentage points that are outlined in your loan.

VA and USDA Loans

The Department of Veterans Affairs insures VA loans, whereas the USDA backs USDA loans. Both loans can help you buy a property with no money down. To qualify for a USDA loan, you must fulfill certain income requirements and purchase a home in an approved suburban or rural location. To be eligible for the VA loan, you must be a US military veteran, active duty service member, or the spouse of someone who satisfies these requirements.

Jumbo loans

Consider this if you want to buy a high-value property and your loan amount exceeds the limits set by Freddie Mac and Fannie Mae. The loan ceiling for most of the United States in 2024 is $766,550. A jumbo loan allows you to borrow more for a home, with interest rates comparable to conventional loan rates. However, consumers normally require a credit score of 700 or higher and a down payment of 5-10%. This is a fantastic alternative for people with low debt-to-income ratios.

FHA loans

FHA Loans are fixed-rate mortgages that are insured by the Federal Housing Administration. These loans are ideal for first-time homebuyers whose credit scores prevent them from qualifying for a conventional loan. Buyers with a credit score of 580 or above may qualify for an FHA loan with as low as a 3.5% down payment. If your credit score is between 500 and 579, you can still get an FHA mortgage with a 10% down payment.

Benefits of a Larger Down Payment

• More equity
• Better mortgage rate
• Lower payments
• Lower upfront/ongoing fees

Additional Things to Consider with Your Down Payment

• Keep money in savings: To avoid being “house poor,” set aside some dollars for emergencies and home repairs.
• Closing costs: Closing costs are the fees, taxes, and other administrative expenditures associated with purchasing a home. They are typically 2-6% of the home’s purchase price, so make sure you have enough cash on hand to cover them.

• Moving costs: The average cost of moving locally is around $1,700, whereas moving 100 miles or more can cost as low as $2,700 on average or up to $10,000. Calculate the costs as you go through the process.

• Homeownership costs include maintenance, home repairs, property taxes, and HOA fees. These continuous expenses must be incorporated into your budget.
• Down payment help programs: While the above may appear onerous, numerous programs provide assistance to first-time homebuyers, so look around and make sure you’re utilizing all available resources.
• Down Payment Calculator: Quickly determine the amount that fits your budget.