Why save for a down payment?   While you can buy a home with very little down with certain loans, it’s not always the best choice.  Something to consider is the need for Private Mortgage Insurance (PMI).  This is the insurance you pay on low down payment mortgages – it protects the lender and investors from defaults on a mortgage loan.

Typically, you have to have mortgage insurance if you have a down payment of less than 20% of your home’s purchase price.  So while low down payment loans feel good up front, they can end up being more expensive in the long run.  You can spend over a thousand a year on PMI alone.

Often people set the goal of saving to put down that 20% that would allow them to avoid paying PMI altogether.  But even just putting down as much as you can is great – once you pay your mortgage down to below 80% of the home’s value, you can request to end your PMI.

Lenders like to see that you’ve saved for a down payment.  But they also look at how you’ve saved.  Tracking funds isn’t as easy as it sounds, and it can affect what a lender is willing to loan you.  So here’s some ways you can make sure everything looks neat and tidy on your end:

Save for a Down Payment:

  • Set a budget and aim to save for your 20% down on your future home.
  • Make sure all of your money is in one place for 2 months prior. When you save a down payment, lenders like to see that you have the appropriate funds in your bank account for a while, and they generally look at the last 60 days.
  • Keep your money in a SEPARATE savings account – not your checking. Keeping your money in a checking account can make it look like you’re constantly spending your down payment, even though you’re not.  Keeping your down payment in one account that you don’t touch eliminates the extra paper trail and questions from possible lenders.
  • DON’T keep your money in someone else’s account or make big deposits last minute. Banks often assume this means you took a loan from someone, and will have to pay it back.  If you do make big changes like that, try to make sure they’re done 2 months in advance.


Hopefully this gives you some simple steps to help get you into the home of your dreams!  If you have any questions and are looking to talk to someone with similar values, give us a call.  We’re a small, faith based company that understands family – and we’re pretty good at mortgages too.  We’d love to help!




The Christian Mortgage Mom