How Much Down Payment Do I Need?
- If you are buying a property for the purpose of an investment, 20% will be the minimum required down payment.
- If you are buying a property for the purpose occupying that home, a minimum of 5% will be the minimum required down payment.
- Let’s break down a few common sources of down payment.
- Savings – This strategy often takes the longest to accumulate.
- HELOC – A home equity line of credit is a common source that many homeowners utilize to invest in real estate. In this case, the interest paid is tax deductible.
- Equity – When done right, homeowners can leverage their built-up equity for the purpose of buying assets like real estate.
- Joint Venture – A JV partnership works great when one party has the down payment, and the other party has the credit and income to help qualify.
- Turn your primary into the rental - This strategy works well for those homeowners who want a rental property but have less than 20% down. Remember an owner-occupied purchase only requires 5% down.