Saving for a Down Payment? Here’s What You Need To Know
If you are planning to buy your first home, then you are 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 are 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.
“One of the biggest misconceptions among housing consumers is what the typical payment is and what amount is needed to enter homeownership.” (source NAR)
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%.
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
And it’s not just how much youn 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 for first time buyers. 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.
Bottom Line
Remember, a 20% down payment isn’t always required. If you want to purchase a home this year, let’s get together to start the conversation about your homebuying goals.
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