How Much Money Do You Need to Buy a House in Warsaw, IN?

The short answer: most first-time buyers in Warsaw need far less than they think. You do not need 20% down, many loans start at 0% to 3.5% down, and the seller can often be asked to help with your closing costs.

A while back, someone called me about a house they wanted to rent. It wasn't for rent. It was for sale. They had just assumed renting was the only way they would ever live somewhere like that.

Nobody had told them no. No lender had turned them down. They had decided it on their own. So we talked, I connected them with a lender, and a few weeks later they owned a home.

That call stays with me, because it's the most common thing I see. People count themselves out before anyone else has the chance to.

You don't need 20% down

This is the biggest myth I hear. Here are the common starting points (a lender confirms what fits you):

• Conventional loan: as little as 3% down.
• FHA loan (a government-backed loan, and the one I see most in our area): 3.5% down.
• VA loan (for eligible veterans and service members): 0% down.
• USDA loan (for eligible buyers and homes in qualifying rural areas): 0% down.

Indiana also has down payment assistance through the state housing authority. Programs and rules change, so your lender is the one to say which ones fit you. Every loan and every deal is different. But 20% is not the entry fee.

"My credit isn't good enough"

Maybe, maybe not. You won't know until a lender looks, and asking costs you nothing. Even when the answer is "not yet," a good lender will tell you what to work on and about how long it should take. That's a plan, which is very different from a no.

Closing costs: the part I can help with most

Closing costs are the fees to finish the purchase, like the lender's fees, title work and prepaid taxes and insurance. They are separate from your down payment, and they surprise a lot of people.

On every first-time purchase, my goal is to have the seller cover your closing costs. That doesn't happen by accident. It comes from how the offer is written and negotiated. On recent purchases, that has meant roughly $4,000 to $13,000 my buyers did not have to bring to closing. Sometimes part of that credit goes toward buying down the interest rate, which lowers the monthly payment.

To be clear, I'm a REALTOR, not a lender. What you qualify for and what you bring to closing depend on your lender, your loan and the contract we negotiate. Results vary. But I go into every first-time purchase aiming for that outcome, and I'll tell you what I think is realistic for the home you want.

What you'll still want to set aside

Even with a low down payment, plan for a few things up front:

• Earnest money: a good-faith deposit when your offer is accepted. It goes toward your purchase at closing.
• Home inspection: paid at the time of the inspection.
• Appraisal: often paid up front through your lender.

Your lender and I will walk you through the real numbers for your situation before you write an offer, so nothing catches you off guard.

Your first step

Start with one conversation. If you're a first-time buyer, my first-time home buyers page walks through the whole process, and the buying page shows how we'll work together. If you've served, my VA home loans page explains that path, too.

Sometimes the answer really is "wait six months and fix two things first." That's fine. At least then you're waiting with a plan, not a guess.