Mortgage Down Payment BasicsIf you are only able to make a small mortgage down payment on the home you wish to buy, then that will affect the type of loan available to you. In fact, a small deposit on a home will also limit the amount of closing costs that the seller will be allowed to pay for you.

More on this later, but the point being made here is that the amount of mortgage down payment that you make does have a significance over and above that on the sum amortized over the loan period. Here are some of the factors of which you should be made aware before deciding on what deposit on a home you should make.

Mortgage Rate Options: FHA Mortgages

There is a misconception that when people apply for FHA mortgages, the down payment rules vary between states. In fact, this is not the case. Under FHA mortgage loan rules, you must pay at least a 3.5% mortgage down payment, irrespective of what the seller is willing to pay. Apart from this, most if your closing costs can be included in the mortgage loan. VA mortgages are similar.

What this means is that if you purchase a home at $200,000, you must pay a minimum $7,000 down payment, otherwise known as a deposit on a home. The majority of your closing costs can be included in the loan and amortized over the 15 or 30 years. These costs vary according your state, and loans are available for 1-4 unit properties.

Mortgage Down Payment and Loan Qualification

Your ability to pay a deposit on a home might determine whether or not you will qualify for a mortgage loan. A larger mortgage down payment can qualify you for a larger mortgage, or may even determine how strictly the mortgage rules are applied. If you are able and willing to make a larger down payment, then lenders are more amenable to discussing special deals with you.

If you are considering paying less of a deposit on a home and trying to get your closing costs integrated into your mortgage, it might seem a good way to reduce your immediate capital costs. However, over time, it might be better if you make a larger down payment. Not only to reduce the amount you borrow, but also to get yourself a lower interest rate and a better mortgage agreement overall.

Finding the Best Mortgage Deal

The importance of the amount deposit on a home you make becomes very obvious when you are trying to find the best mortgage deal. It is difficult to find the best deal online because in this case nothing beats personal contact.

Draw up a list of the most likely mortgage lenders from an internet search and then call them personally. Discuss the best mortgage deals they have to offer. Get the best you can with the minimum mortgage down payment, and then offer to increase that. You may very well be offered a better deal. Lenders tend to be impressed by a larger deposit on a home you want to buy.

You could end up getting a far better deal than you expected simply by increasing your mortgage down payment by as little as 0.5%. That is $1,000 on a $200,000 home. The importance of a deposit on a home is not understood by many people. Most people are advised to make the largest mortgage down payment they can – but only after negotiating special terms for doing so.