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What Triangle Home Buyers Should Know About Down Payments

Your down payment affects the amount you borrow, the cash you need at closing, and the savings you keep after the purchase. Compare the complete cash plan before choosing a percentage.

By Kevin J Darby · · 6 minute read

Start with the complete cash plan

A down payment is the part of the purchase price you pay at closing instead of borrowing. Account for closing costs and prepaid taxes or insurance in addition to the down payment. Ask your lender how much cash you will need at closing. Plan for inspection and moving costs, plus the savings you want to keep after closing.

A larger down payment can reduce the amount you borrow. Using all available cash can leave little room for repairs or an unexpected expense. Ask a licensed lender to compare options using your income, credit, property type, and goals.

Your complete cash plan

Before closing: possible expenses

  • Due diligence feePaid the same day as the offer
  • Earnest moneyPaid shortly after the offer
  • Various inspectionsHouse, wood-destroying insects, septic, radon, and other
  • Appraisal feeOrdered by your lender
  • Possible utility depositsSometimes due before closing, sometimes after

At closing and after

  • Down paymentThe part you pay instead of borrowing
  • Closing costsAsk your lender for the cash-to-close estimate
  • Prepaid taxes and insuranceCounted on top of the down payment
  • Moving costsPlan for these too
  • Savings after closingA cushion for repairs or surprises
Blocks show the parts to plan for, not amounts or proportions. Not every item applies to every purchase. Your lender provides the actual cash-to-close estimate.

Compare options below 20 percent

Some conventional mortgages allow down payments below 20 percent. Government-backed loans and state assistance programs use their own structures. A smaller down payment may change mortgage insurance, program fees, eligibility rules, occupancy requirements, or the monthly payment.

Ask the lender to compare the full cost and cash-to-close picture at more than one down-payment level. Program administrators and lenders can change limits, rates, assistance amounts, and eligibility rules. Confirm current details with the program administrator and a participating lender before you rely on an online summary.

Check current North Carolina assistance

The North Carolina Housing Finance Agency (NCHFA) offers its NC Home Advantage Mortgage to qualified first-time and move-up buyers through participating lenders. The agency describes down-payment assistance that is available with that mortgage.

NCHFA also describes NC 1st Home Advantage Down Payment as a separate assistance option for qualifying first-time buyers, military veterans, and buyers purchasing in eligible targeted census tracts.

Each program applies income, credit, occupancy, property, sales-price, and loan requirements. NCHFA structures these assistance options as deferred subordinate mortgages. If you sell, refinance, or transfer the home before forgiveness is complete, NCHFA can require you to repay the remaining balance.

NCHFA can change program limits and requirements. Confirm current rules with the agency and an NCHFA participating lender before you rely on assistance.

FHA-insured home-purchase financing is another option, with its own minimum down-payment rules for eligible borrowers. FHA financing includes borrower and property requirements, plus upfront and monthly mortgage-insurance costs. Ask a licensed mortgage professional to compare the full FHA loan terms with any conventional, VA, USDA, or assistance-program options available to you.

Compare lender scenarios before choosing

Ask a licensed lender for side-by-side estimates at more than one down-payment level. Compare the interest rate and annual percentage rate (APR), mortgage insurance or funding fees, total monthly payment, cash to close, and savings left after closing.

Kevin can connect those financing scenarios to the homes and timing you are considering. A licensed lender should answer your individualized mortgage questions and assess eligibility.

Side-by-side lender worksheet

Item to compareLower down paymentHigher down payment
Interest rate and APRAsk lenderAsk lender
Mortgage insurance or funding feesAsk lenderAsk lender
Total monthly paymentAsk lenderAsk lender
Cash to closeAsk lenderAsk lender
Savings left after closingAsk lenderAsk lender
Ask a licensed lender to fill in each box for more than one down-payment level, then compare.

Questions to take to a lender

  • Which loan options fit my intended occupancy, property type, income, credit profile, and purchase timeline?
  • For each down-payment option, what interest rate, annual percentage rate (APR), monthly payment, cash to close, and savings after closing should I expect? How would mortgage insurance change?
  • What is included in my estimated cash to close besides the down payment?
  • Will mortgage insurance, an upfront premium, a funding fee, or another program fee apply? How do I pay it, and can it be removed under any conditions?
  • Could I qualify for NC Home Advantage or NC 1st Home Advantage assistance, and what could change my eligibility?
  • After closing, how much cash would I have left, and does this loan require financial reserves?
  • At what point should we discuss an interest-rate lock, and what happens if the closing date changes?
  • Does a condominium, townhome, manufactured home, duplex, or property with an HOA create additional financing requirements?

Sources

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