Final answer:
The typical down payment for a conventional home mortgage is 3) 20% of the purchase price. Lower down payments are possible but may require mortgage insurance. A significant down payment is part of the long-term commitment to homeownership and results in saving costs over the term of the mortgage.
Step-by-step explanation:
The typical amount of cash needed for a down payment for a conventional home mortgage is generally 20% of the purchase price. This is a standard expectation from lenders to ensure that the borrower has a significant financial stake in the property, which reduces the lender's risk in case of default.
For example, if you purchase a home for $200,000, a 20% down payment would be $40,000. This doesn't mean that lower down payments are not possible. Buyers can sometimes take advantage of lower down payment options like 0-3.5%, but these usually require purchasing mortgage insurance, increasing the long-term cost of the mortgage.
Homeownership is a long-term commitment, which is why a sizeable down payment is beneficial. It results in a lower monthly payment and less expense over the term of the mortgage, which typically lasts 15 to 30 years.