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Purchasing a home is an exciting milestone, and with it comes a lot of new information to take in. If you’re beginning your homebuying journey, you’ve likely heard terms like “down payment” and “closing costs.” While both are important parts of purchasing a home, they serve different purposes. Let’s walk through what each of these mean and what you can expect when buying your new home.
What Is a Down Payment?
Your down payment is the amount of money you pay upfront toward the purchase of your home. It’s usually expressed as a percentage of the total purchase price. For example, if you purchase a $200,000 home, a 5% down payment would be $10,000.
The exact amount depends on the type of loan you choose:
- FHA Loans: May allow for as little as 3.5% down.
- Conventional Loans: Often require 3–5% down, but some programs may allow for more flexibility.
- VA Loans: Help veterans, service members, and eligible surviving spouses become homeowners.
- USDA Loans: Qualified buyers may have the option of no down payment at all.
The good news? You no longer need a 20% down payment to buy a home. Many first-time buyers are surprised at how affordable their down payment can be, and some even end up with a $0 down payment!
What Are Closing Costs?
While your down payment goes directly toward the purchase of your home, closing costs cover the fees and services needed to finalize your mortgage. Think of them as the finishing touches that get you across the finish line on closing day.
Closing costs can include:
- Loan processing fees
- Appraisal and inspection fees
- Title search and insurance
- Taxes
- Prepaid homeowner’s insurance
On average, closing costs typically range from 2–5% of your home’s purchase price. For that same $200,000 home, you might expect closing costs between $4,000 and $10,000. Note that the amount of homeowners insurance, mortgage insurance, and property taxes you pay at closing can vary widely by the time of year you close. Our preferred lenders will prepare you for what to expect so there are no surprises on your closing day.
Betenbough Homes offers our home buyers Use-It-Your-Way Cash to help make your dream of homeownership a reality. This financial gift can be used to help cover closing costs, in addition to many other options. So there's no need to let closing costs keep you from purchasing a new home — we're here to help!
Planning Ahead
Because both down payment and closing costs are due at the time of closing, it’s important to plan ahead and know what to expect. Many buyers set a savings goal that includes both while also exploring programs that may help with down payment assistance or closing cost support.
At Betenbough Homes, our team is here to guide you through each step of the process. We’ll connect you with one of our trusted preferred lenders who can walk you through your options, provide clear estimates of your costs, and ensure you feel confident about your investment.
The Bottom Line
Your down payment and closing costs are two key pieces of the homebuying puzzle, but they don’t have to be overwhelming. With the right guidance and preparation, you’ll feel confident walking into your closing day, keys in hand, ready to step into your new home.
At Betenbough Homes, we believe homeownership should be both attainable and rewarding. Our dedicated team is here to help you every step of the way, making sure you understand the process, your options, and the value of your new home. Get started today by scheduling your New Home Tour!
