If you are considering purchasing your first home, your main concern is likely to be saving for the various expenses associated with such a significant investment. One of the costs that might be causing you worry is the down payment. If you are feeling overwhelmed by the amount you need to save for this, it could be because you think you have to put down 20%. However, this is not always the requirement, as highlighted by the National Association of Realtors (NAR) pointed out:
“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 is some positive information: Unless your loan type or lender specifies otherwise, you usually do not need to make a 20% down payment. This brings you closer to achieving your dream of buying a home than you may think.
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):
How does this impact you? It suggests that you might not have to save as much as you initially anticipated.
Learn About Options That Can Help You Toward Your Goal
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.”
Moreover, there are various loan options available, such as FHA loans that offer down payments as low as 3.5%, along with alternatives like VA loans and USDA loans that do not necessitate down payments for eligible candidates.
If you wish to explore further about down payment support programs, you can find information on platforms like Down Payment Resource. Subsequently, collaborate with a reputable lender to determine the options you qualify for during your homebuying process.
Please be aware that a 20% down payment is not always required. If you are thinking about purchasing a home this year, contact me so we can start talking about your homebuying goals.
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This article provides information and opinions but is not meant as investment advice. Skip Geiser LLC does not assure the accuracy or completeness of the information or opinions presented here. It is important to conduct your own research, due diligence, and seek professional advice before making any investment decisions. Skip Geiser LLC is not responsible for any loss or damage resulting from relying on the information or opinions in this article.
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