To pay the down payment for a resale property, buyers must secure the necessary funds through savings, loans, or gift assistance. A minimum of 20% is typically required for conventional loans to avoid private mortgage insurance (PMI), though FHA loans allow 3.5% for first-time buyers. Pre-approval from a lender ensures financing readiness, and closing costs, which average 2-5% of the purchase price, must be budgeted separately. Buyers may use cashier’s checks, wire transfers, or escrow accounts for the down payment, with banks verifying the source of funds to comply with anti-money laundering laws.

The 20% down payment requirement reduces loan default risk, as shown by the Federal Housing Finance Agency (FHFA), which found that loans with 20% equity have a 50% lower default rate than those with less. The Consumer Financial Protection Bureau (CFPB) reports that 68% of homeowners who put less than 20% down paid average monthly PMI premiums of $110, increasing total costs by $30,000 over 30 years. For FHA loans, while 3.5% is sufficient, mortgage insurance premiums (MIP) of 1.75% upfront and 0.85% annually add long-term expenses. Resale properties often require higher down payments than new builds due to fluctuating market values and older mortgage terms. Data from the National Association of Realtors (NAR) indicates 45% of resale buyers used savings for down payments, while 15% relied on family gifts. Lenders increasingly require proof of reserves, typically 2-3 months’ mortgage payments, to ensure financial stability post-closing. Alternative programs like the Fannie Mae HomeReady loan offer 3% down with 6% minimum credit scores, targeting underserved markets. However, 80% of resale transactions still involve conventional loans, reflecting buyer preference for lower long-term costs despite higher upfront requirements. Compliance with local down payment assistance programs, such as those in Hawaii (up to $50,000) and Texas ($10,000), can further reduce burdens. Ultimately, aligning down payment strategies with creditworthiness, loan type, and market conditions optimizes affordability and equity accumulation.