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Saving for a Down Payment
Find out how much to save and get tips for reaching your goal.
For many people, saving for a down payment is one of the many barriers to buying a home. Some loans require a down payment of 5% to 20% of the price of the home—which can be a big chunk of change.
But having a sizeable down payment does have benefits:
- The more you put down, the lower your monthly payment will be
- If you have 20% down, you won’t need Private Mortgage Insurance (PMI)
- A bigger down payment can help you qualify for a lower rate
Set a down payment savings goal.
Before you know how much you need to save, think realistically about how much you’ll be spending on your home purchase. If you don’t have a price range in mind, get pre-approved or use our affordability calculator to determine a reasonable range. Once you’ve got your number, set your sights on saving 5% to 20% of that amount.
Put time on your side.
If you’re not looking to buy immediately, you can break your savings goal down into more manageable monthly amounts. If you need to save $10,000 and want to buy in about a year, you’ll need to save about $840 a month.
If you don’t have a large down payment, you still have options.
Cut out and cut back.
Finding extra money to put toward a down payment isn’t easy, but if you take a careful look at your budget, you will likely find things to cut out or cut back on. Here are some ways to get started:
- Put a temporary hold on non-essentials like new clothes, eating out, gym memberships and vacations
- See if you can switch to less expensive cable, internet and cell phone plans
- Set up an automatic transfer to savings account dedicated to your down payment
Alternative down payment options.
Many people borrow from family and friends to help finance a down payment. But depending on how much you borrow, this may be a factor in which loans you qualify for. A PNC Mortgage loan officer can provide more details on other down payment options, such as gifts from family, loans from friends, or borrowing from a retirement fund to pay for a down payment without the usual penalties. If you’re considering any of these options, we recommend consulting with a financial advisor to discuss the pros and cons.
Consider lower down payment options.
If saving 5% to 20% just isn’t realistic, don’t be discouraged. You may qualify for a no or low down payment mortgage options, such as Fannie Mae's 3% down payment program or government backed VA and FHA loans. Check out the different loans PNC has to offer. to review what’s available from PNC. Or contact one of our Loan Officers to see if you qualify for any specialized loans.
Discuss your preferences, learn more about your loan options, and see if you are pre-qualified.
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Want a more complete picture of your home lending loan?
Explore the Understanding Home Lending Center to learn the mortgage process, find the right loan or line of credit for you, and explore options to lower your payments.
When you’re starting to get serious about house hunting, getting pre-approved by a mortgage lender can be a smart move.
Learn how this simple step could help you get the home you want.
House hunting? Getting pre-approved by a mortgage lender can be a smart move, because you'll:
- Know in advance exactly how much you can borrow, so you won’t waste time looking at out-of-reach properties
- Be able to better estimate monthly mortgage payment and budget around it
- Show real estate agents and sellers that you're serious – giving yourself an advantage over other buyers
You can often get a commitment letter from your lender in as little as 48 hours, once your paperwork is complete.
What Is Pre-Approval & What Are the Benefits?
Pre-approval means you’re qualified for up to a specified loan amount based on your financial situation.
This means that you will:
- You'll know in advance exactly how much you can borrow, so you won’t waste time looking at out-of-reach properties.
- You'll be able to better estimate monthly mortgage payment so you can budget around it.
- You show real estate agents and sellers that you are serious–which can give you an advantage over other buyers.
How Can I Prepare for Pre-Approval?
Get your documents ready. You should be prepared to provide:
- Recent pay stubs – usually for the previous two or three months
- If you are employed, W-2s and federal tax returns for the past two years
- If you are self-employed, two years of business tax returns, profit and loss statement and a current year-to-date balance sheet. If a current balance sheet is not available, business banking statements may be acceptable for a Sole Proprietor.
- Two to three months of recent bank statements, and other investment and savings statements
- Contact information for your landlord (if you rent)
- Your divorce decree if applicable
The lender will also analyze your credit report (for you and any co-applicant) to determine if you qualify and what rate you may be offered. Having an average or better credit score will work in your favor. Learn more about your credit score.
Get Approval in as Little as 48 Hours
Once your paperwork is complete, you can often get a commitment letter from your lender in as little as 48 hours.
Most pre-approval letters are good for 30 days. If you need more time, your lender will most likely pull a current credit report to make sure your financial situation hasn’t changed.
What if I Don't Get Approved?
Don’t give up if you don’t get approved:
Reasons for being denied usually fall into two areas—credit and income— and the lender will let you know why you weren’t approved.
Before you re-apply and depending on your specific denial reasons you may want to:
- Correct any errors on your credit report, and shoot for getting and staying in the average or better range.
- Check out how to improve your credit score
- Pay down as much of your debt as possible.
- Consider increasing your down payment to help you qualify for the loan amount you want.
Important Legal Disclosures & Information
PNC and PNC HomeHQ are registered service marks of The PNC Financial Services Group, Inc. ("PNC"). PNC is a registered service mark of The PNC Financial Services Group, Inc. (“PNC”). All loans are provided by PNC Bank, National Association, a subsidiary of PNC, and are subject to credit approval and property appraisal.
PNC Bank, National Association. Member FDIC.
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