Saving for a Down Payment? What You Should Know
If you're going to buy your first house, you're definitely concerned about saving for all of the expenses that come with such a large purchase. One of the expenses that may be on your mind is the down payment. If you're worried about how much money you'll need to save, it could be because you believe you need to put down 20%. 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.
Learn About Options That Can Help You Toward Your Goal
It's not simply the amount you'll need for a down payment that's unclear. Misconceptions regarding down payment aid schemes abound. To begin with, many people believe that help is exclusively accessible to first-time homebuyers. While first-time purchasers have a plethora of alternatives, repeat buyers do as well.
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.”
If you want to learn more about down payment help programs, you may visit websites like Down Payment Resource. Then, work with a reputable lender to determine what you are eligible for on your homebuying journey.
Keep in mind that a 20% down payment is not always required. If you want to buy a home this year, let's get in touch to discuss your homebuying goals.