If you are considering moving to Lexington, families often weigh the options between renting and buying. Deciding whether to stay in a rental for a few more years to save up or to enter the market now can be challenging. The starting point for this decision is the numbers. According to Zillow, the average home price in Lexington is $1,626,916. As of the end of May 2026, this represents a 2.1% increase from the previous year. Rental prices are also on the rise, leading some families to feel that the difference between monthly rent and mortgage payments is not as significant as it once was. The amount you set for your down payment in this price range can greatly affect your initial cash burden and monthly payments.

Breaking it down by percentage:

• 3.5% (FHA loan, credit score 580 or higher): approximately $56,942
• 5%: approximately $81,346
• 10%: approximately $162,692
• 20%: approximately $325,383

If you put down less than 20%, you will incur PMI, or private mortgage insurance. This is a cost that is added monthly based on a percentage of the loan amount, which can be significant in a high-priced area like Lexington. If you put down more than 20%, PMI is eliminated, but that means you need to save a larger initial amount. Massachusetts has relatively high property taxes compared to the national average. The state's average effective tax rate is about 1.11%, which means annual property taxes could exceed $18,000 based on this home price. Families moving from states with lower property taxes may overlook this aspect. During the loan approval process, the housing cost-to-income ratio is calculated, including property taxes and insurance, so budgeting based solely on the down payment amount could lead to discrepancies in the actual approval amount.

To increase your approval chances, you should first look at your credit score and DTI, or debt-to-income ratio, before focusing on the down payment amount. A credit score above 780 can lower the average 30-year fixed interest rate to 6.59%, while scores in the 760s are at 6.66%, 740s at 6.75%, and 700s at 6.91%. This difference can significantly impact your total payments over decades. A DTI of 43% or lower is considered safe, and for front-end DTI, which only considers housing costs, aiming for 28% or lower is advisable. Getting pre-approved can also be advantageous when making an actual offer, as it clarifies your budget. It's best to avoid opening new credit cards or auto loans before closing. The same goes for changing jobs. If your income verification is disrupted, the review process may need to start over. Keeping a few months' worth of living expenses set aside as reserves can also help with stable fund management after approval.

Consider whether to go with a 3.5% down payment for an FHA loan or a conventional loan. First-time homebuyers or those with an area median income of 80% or less may qualify for a conventional loan with as little as 3%. FHA loans have lower credit score requirements but often require ongoing mortgage insurance. Conventional loans offer better terms with higher credit scores, and if you put down 20%, there is no PMI. In high-priced areas like Lexington, this choice can lead to significant differences in monthly payments. It's advisable to compare quotes from two or three lenders.

If you are a family that just moved from Korea, your credit history may be short, making approval more challenging. In this case, having a co-signer or offering a substantial deposit can help in negotiations. Building a credit history in the U.S. takes time, so managing your credit card usage from the start can be beneficial for future loan applications.

Lexington is often mentioned among Korean families due to its school districts. While you can refer to ratings from GreatSchools or Niche, school district boundaries change frequently, so it's important to verify the assigned school for the specific address before purchasing. Interest rates can fluctuate between the pre-approval and closing dates. After your offer is accepted, it's wise to check with the lender about the rate lock status and duration. If you don't close before the lock period ends, the interest rate may be recalculated. This article is not investment or legal advice, and it is recommended to consult a professional before making any contracts.