If you're planning to buy your first home, then you're probably focused on saving for all the costs involved in such a big purchase. One of the expenses that may be at the top of your mind is your down payment. If you’re intimidated by how much you need to save for that, it may be because you believe you must put 20% down. That doesn’t necessarily have to be the case. As the National Association of Realtors (NAR) notes:
“One of the biggest misconceptions among housing consumers is what the typical down payment is and what amount is needed to enter homeownership.”
And a recent Freddie Mac survey finds:
“. . . nearly a third of prospective homebuyers think they need a down payment of 20% or more to buy a home. This myth remains one of the largest perceived barriers to achieving homeownership.”
Here’s the good news. Unless specified by your loan type or lender, it’s typically not required to put 20% down. This means you could be closer to your homebuying dream than you realize.
According to NAR, the median down payment hasn’t been over 20% since 2005. In fact, the median down payment for all homebuyers today is only 14%. And it’s even lower for first-time homebuyers at just 6% (see graph below):
What does this mean for you? It means you may not need to save as much as you originally thought.
And it’s not just how much you need for your down payment that isn’t clear. There are also misconceptions about down payment assistance programs. For starters, many people believe there’s only assistance available for first-time homebuyers. While first-time buyers have many options to explore, repeat buyers have some, too.
According to Down Payment Resource, there are over 2,000 homebuyer assistance programs in the U.S., and the majority are intended to help with down payments. That same resource goes on to say:
“You don’t have to be a first-time buyer. Over 38% of all programs are for repeat homebuyers who have owned a home in the last 3 years.”
Plus, there are even loan types, like FHA loans with down payments as low as 3.5% as well as options like VA loans and USDA loans with no down payment requirements for qualified applicants.
If you’re interested in learning more about down payment assistance programs, information is available through sites like Down Payment Resource. Then, partner with a trusted lender to learn what you qualify for on your homebuying journey.
Remember, a 20% down payment isn’t always required. If you want to purchase a home this year, let’s connect to start the conversation about your homebuying goals.
The information contained, and the opinions expressed, in this article are not intended to be construed as investment advice. The Home Run Team, Ltd. does not guarantee or warrant the accuracy or completeness of the information or opinions contained herein. Nothing herein should be construed as investment advice. You should always conduct your own research and due diligence and obtain professional advice before making any investment decision. The Home Run Team, Ltd. will not be liable for any loss or damage caused by your reliance on the information or opinions contained herein.
If you’re weighing the decision to move, take a look at some of the top reasons others are choosing to sell. You might find those are reason enough for you to move now… Read more
There's a key VA Loan benefit that veterans have access to; but no one knows about it.
Historically, there has been a gap in the net worth between rents and homeowners. But now, it's on another level.
When selling your home, starting with the right asking price is essential; here's why you need an agent to help
Trying to decide between renting or buying a home? One key factor that could help you choose is just how much homeownership can grow your net worth.
Recently, the housing market itself hasn't been the only thing unpredictable: mortgage rates have been too.
You may be hearing a lot of talk about the Federal Reserve (the Fed) and how their actions will impact the housing market right now. Here’s why.
You’ve probably noticed one thing if you’re thinking about making a move: the housing market feels a bit unpredictable right now.
Thinking about buying a fixer upper house as a cheap alternative? Here's some tips to help you.
We're here to help people live wealthier lives and enjoy more freedom by educating and guiding them through their lifelong real estate journey. Whether you're buying a home, looking to sell or relocate, or are an investor, we can help you. No agents will work harder for you, because to us, going to bat for you, isn't work. That's just what you do when you're a team.