Do Banks Give Loans For Down Payments?
Sure. Banks are in the business of making loans to their customers. If you have adequate income and credit score, a bank may be quite willing to give you a personal loan large enough to cover a down payment.
But there is a hitch to this. An unsecured loan (personal loan with no collateral) is not an acceptable source of funds to close with U.S. mortgage lenders.
There’s also the matter of closing costs to deal with. While you can buy a home with a down payment as small as 3%, you also have to deal with other fees and costs, including (but not limited to)
- Title and escrow fees
- Recording with the county
- Underwriting and processing
- First year’s homeowner’s insurance
- Initial deposit to create the impound account for taxes and insurance
There is no hard-and-fast rule to assess how much closing costs will be, as they vary according to the type of transaction, location and time of year. If you think in terms of 2%-3% of the selling price, you’ll be in the ballpark.
Many people believe the myth that there is such a thing as a “normal 20% down payment.” It is just that—a myth. The average down payment in the U.S. is about 11%. For first-time buyers, it’s about 6%.
Buying a home today takes some cash, but not as much as many people seem to believe.
I hope this is helpful.