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Ever wonder how much money you need to have put aside to buy the home you've been driving by and dreaming about for the last month? Afraid you don't have enough? Well, many factors contribute to the decision making process of what type of down payment you should make on a home. Let's look at a few.

In a perfect world, every buyer would apply 20% of the purchase price toward a down payment on a loan transaction. They would have 720 credit scores and have worked at the same company (which they do not own themselves) for the past 10 years. They pay their credit card balances off every month, own their car outright, and have a savings kitty equal to their yearly income. Trust me, these people do exist. We lenders just don't see them every day. But doing a loan for these individuals is a walk in the park.

Most of us try to save what we can. That's important when buying a home. However, many mortgage products allow for varied down payment options from 20% down plus closing costs to coming to the table with no money at all.

To come to the table with no money at all, you must either be a first time homebuyer or your income is under a certain mandated amount. These programs are designed to boost the home buying segment of our population and allow modest income receiving individuals to be homeowners. Providing they have a good credit and work history and haven't owned a home in the past three years, they are perfect candidates for 100% financing. If the value of the property allows it and the seller is willing, oftentimes the seller can contribute anywhere from 3-6% if the closing costs. Mortgage insurance (MI), incorporated into the monthly payment, will be required by the lender, and normally it's at a reduced rate. If you're income is below a certain level, you can deduct the mi from your taxes. That's how you can show up, buy a house and put no money down.

The next common tier for consideration is a 3% investment. An FHA loan is the first product that pops into mind when hearing the 3% thresh hold, however there are conventional products that also allow this minimal investment, too. Again, mortgage insurance will be required regardless of the chosen product, but other factors such as credit score and loan amount must be considered when deciding if this a good fit for you.

With recent changes in the industry, a 5% down payment is the most typical rule of thumb for no strings attached financing that one sees today. When I say no strings attached, I am talking about applying

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