Are you in the process of buying your first home? Saving for the various costs associated with such a significant purchase is likely your primary focus. Among these expenses, the down payment might be the one causing you the most concern. You may believe that you have to put down 20% of the purchase price, which can be quite intimidating. However, that is not necessarily the case. The National Association of Realtors (NAR) has pointed out a common misconception among homebuyers:
"Many housing consumers are misinformed about the typical down payment and the amount required to become a homeowner."
A recent survey conducted by Freddie Mac also discovered that nearly one-third of prospective homebuyers believe they need a down payment of 20% or more. This misconception remains one of the main perceived obstacles to achieving homeownership. But here's the good news: Unless your loan type or lender specifically requires a 20% down payment, it is generally not mandatory. This means you may be closer to realizing your dream of owning a home than you think.
According to the NAR, the median down payment has not exceeded 20% since 2005. In fact, the median down payment for all homebuyers today is only 14%. For first-time homebuyers, it is even lower, at just 6% (refer to the graph below).
What does this mean for you? It means you may not need to save as much as you initially believed.
Discover Options to Help You Reach Your Goal
The lack of clarity surrounding down payments extends beyond the amount you need to save. There are also misconceptions about down payment assistance programs. Many people mistakenly believe that these programs are only available to first-time homebuyers. While first-time buyers do have numerous options to explore, repeat buyers have options as well.
According to Down Payment Resource, there are over 2,000 homebuyer assistance programs in the United States, with the majority designed to aid with down payments. The same resource states:
"You don't have to be a first-time buyer. More than 38% of all programs cater to repeat homebuyers who have owned a home in the last three years."
Furthermore, there are loan types available, such as FHA loans, which offer down payments as low as 3.5%. Additionally, there are options like VA loans and USDA loans that require no down payment for qualified applicants.
If you want to learn more about down payment assistance programs, you can find information on websites like Down Payment Resource. To determine your eligibility and explore the options available on your homebuying journey, it is advisable to partner with a trusted lender.
Keep in mind that a 20% down payment is not always a strict requirement when purchasing a home. If you're considering buying a home this year, it's essential to have a conversation about your homebuying goals. Connect with Anthony Spitaleri and his team to initiate that discussion and explore the possibilities of making your dream of homeownership.
