NerdWallet's Smart Money Podcast
From Broker to Budget: How to Buy or Sell a Home in 2025
24 Mar 2025
Chapter 1: How did Sean secure the best mortgage deal?
Sean, you're a homeowner. When you bought your house, how did you make sure you got the best deal on your mortgage?
Well, I bought my house in 2021 and was still spending a lot of time holed up in my house due to the pandemic. So I had plenty of time to shop around and compare lenders and naturally build out a very elaborate spreadsheet with all of my options.
Well, that's definitely on brand for you, Sean. And I'm glad that you did your due diligence.
NerdWallet's Smart Money Podcast, where you send us your money questions and we answer them with the help of our genius nerds. I'm Sean Piles.
And I'm Elizabeth Ayola. On this episode, I talk with mortgage nerd, Kate Wood, to answer a listener's question about how much house they can afford as a first-time buyer.
And sadly, I'm not there for that conversation, but spoiler alert, I may make a special cameo, and you'll just have to listen to find out what that means exactly. But first, we're going deep into the nuts and bolts of shopping around for a mortgage, including how to get the best rates and what to look for in a broker or lender.
And joining us in this conversation is Jonathan Haddad, president of Nextdoor Lending, a mortgage broker and wholly owned subsidiary of NerdWallet. Jonathan, welcome to Smart Money. Thank you for having me today, Sean.
So I think a lot of folks might not fully understand the role of a mortgage broker. Can you explain what a broker does and also how they fit into the home buying process as a whole?
Mortgage brokers fit into the process as that in-between person to help find the best opportunity for you and your family. It's really quite simple. Over the last decade, mortgage brokers have increased the market share to over 25%, which means one out of four homeowners are now using a mortgage broker.
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Chapter 2: What are the benefits of using a mortgage broker?
There are also FHA loans, and these are often popular with first-time homebuyers because they have less strict qualifications. Those can have down payments as low as 3.5%. It's going to vary by credit score, though. For buyers who have a military connection and are eligible for a VA loan, or if you're buying in a rural area and could use a USDA loan, those loans don't require a down payment at all.
When you mention a larger down payment, it takes me back to the pandemic times when I was considering purchasing a property and it was a seller's market. I remember larger down payments being a theme and a tip shared by realtors that I work with at the time. Would you recommend people aim to save 20% down payments?
So in most parts of the country, it is very much still a seller's market. And, you know, realistically, in that kind of market, making a larger down payment could potentially help set you apart from other buyers, especially if you're competing with cash buyers.
Even if the seller is looking at two offers that are offering the same price for the home, sometimes seeing a larger down payment can feel like more money to them. Just seeing that number feels a lot better. They feel more confident. It can also send the message that you're making a serious offer.
But especially for first-timers, it's important to remember that you are not required to make a 20% down payment. Last year in 2024, according to the National Association of Realtors, the median down payment for first-time home buyers was 9%.
Kate, where does the idea of a 20% down payment even come from? And I imagine that sounds intimidating to me, especially with home prices these days. That might be tough to do in this economy for some people. It is tough to do because 20% of a home price is
generally a substantial amount, right? Even if you were looking at a $100,000 home, which really doesn't exist at this point, but even if you were, that would be saving up $20,000. That's a lot of money to set aside.
So the idea that you need that size of a down payment, it just comes from conventional loan requirements that you need a down payment of at least 20% to avoid private mortgage insurance. So you can make a lower down payment. So you'll need to pay private mortgage insurance until you've got at least 20% equity in the home.
And this is to help assure the lender that they aren't taking on too much risk. So mortgage insurance, it's not nothing, but I also want to emphasize it's not the end of the world, okay? So mortgage insurance is going to vary between about 0.5% to 1.5% of the amount of your mortgage. So not of the price of the home, but the amount that you actually borrow.
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