🚨 Why is a Down Payment Required? 🚨
19 Oct 2021
Down payments protect lenders from risk when you borrow money for a home. VA and USDA loans use fees instead of down payments to guarantee the loan, shifting how risk gets covered.
Down payments protect lenders from risk when you borrow money for a home. VA and USDA loans use fees instead of down payments to guarantee the loan, shifting how risk gets covered.
Down payment on a home loan alleviates risk. Statistically speaking, if someone put their hard earned money into their house, they're much less likely to walk away from that. Even if they fall on hard times, they're gonna do everything within their power to keep making their mortgage payments. Even the zero down loan programs like va, they have a funding fee, usda, they have a guarantee fee monthly. And this is so they collect reserve funds to where in the event someone falls on hard times and forecloses on their house, USDA and VA are still covered. So everything's about alleviating risk. And that's why a down payment is generally required in most home loans.
