How Much Money Do You Actually Need to Buy a House in Terre Haute, Indiana?

One of the first questions I hear from homebuyers is:

“How much money do I actually need to buy a house?”

And no, the answer is not automatically 20% down. (Please tell whoever started that rumor that mortgage lenders would like a word. 😂)

Depending on the loan program, you may need as little as 0% down. But your down payment also isn't the only expense we need to plan for.

I'm Chelsea Lentes, a Senior Loan Officer with Ruoff Mortgage in Terre Haute, Indiana, and one of the biggest parts of my job is helping buyers understand the whole picture before they start shopping.

So, let's talk about what you may actually need.

First: Your Down Payment

Different mortgage programs have different down payment requirements.

Conventional loans: Some qualified buyers can purchase with as little as 3% down, while 5%, 10% and 20% down are other common options.

FHA loans: The standard minimum down payment is 3.5% for borrowers who meet the applicable credit requirements.

USDA loans: Eligible buyers and eligible properties may qualify for 0% down financing.

VA loans: Eligible veterans, active-duty service members and certain surviving spouses may qualify for 0% down financing.

There may also be down payment assistance programs available to Indiana homebuyers, depending on things like income, household size, location, credit qualifications and the specific program. That's why I don't like giving buyers a one-size-fits-all answer.

Your best option isn't necessarily the program with the smallest down payment. We need to look at the payment, cash needed, interest rate, mortgage insurance, your future plans and your overall financial picture.

Then There Are Closing Costs

Your down payment and your closing costs are two different things.

Closing costs can include items such as lender and third-party costs, title work, prepaid homeowners insurance, property taxes and initial escrow funding. The exact amount depends on the property and transaction, which is also why your numbers become more accurate as we get further into the mortgage process. And here's another important piece: seller concessions may sometimes help cover eligible closing costs, depending on your loan program and purchase agreement.

That's something your lender and Realtor can discuss with you before you make an offer.

Don't Forget the Upfront Expenses

There are also a few expenses that can happen before closing.

For example, a buyer may have:

• Earnest money

• A home inspection

• An appraisal

• Other property-specific inspections

Some of those funds may ultimately count toward what you need for the transaction, while others are separate expenses.

This is exactly why I like having the money conversation before you fall in love with a house.

So… How Much Should YOU Save?

This is where I give you the least exciting mortgage answer ever:

It depends.

But that's actually good news.

You don't need to figure it out by yourself, and you don't need to wait until you've saved some magical dollar amount before talking to a lender.

I've worked with buyers using conventional, FHA, USDA, VA and Indiana down payment assistance options. Sometimes we discover someone is closer to buying than they thought. Other times, we build a plan so they know exactly what they're working toward.

Either way, I'd rather give you real numbers than have you guessing based on something you saw online.

Looking for a Mortgage Loan Officer in Terre Haute, Indiana?

I'm Chelsea Lentes, Senior Loan Officer with Ruoff Mortgage in Terre Haute, and I help homebuyers throughout Indiana and Illinois understand their mortgage options from pre-approval through closing.

Whether you're buying your first home, your fifth home or you're simply trying to figure out if homeownership is possible yet, I'm happy to start with the numbers.

Because you don't need to know everything about mortgages before calling me.

That's kind of my job. 😉