Do you want to buy a home, but the idea of saving for a down payment makes homeownership feel out of reach? If so, you’re not alone! Many homebuyers still believe that you are required to have a 20% down payment. In other words, people who could buy a home may be putting their plans on hold because they don’t have that much saved up yet. We are happy to tell you that whether you’re looking for your first home or you’ve purchased one before, you most likely don’t need to put 20% down!
According to Freddie Mac:
“The most damaging down payment myth – since it stops the homebuying process before it can start – is the belief that 20% is necessary.”
We couldn’t agree more. Saving that much money might sound daunting to potential homebuyers. In this case, they might give up on their dream of homeownership before they even begin; but they don’t have to.
Data in the 2020 Profile of Home Buyers and Sellers from the National Association of Realtors (NAR) indicates that the median down payment hasn’t been over 20% since 2005, and even then, that was for repeat buyers, not first-time homebuyers. As the image below shows, today’s median down payment is less than 20%.
The median down payment was lowest for first-time homebuyers with the 2020 percentage coming in at 7%. If you are a first-time homebuyer and a 7% down payment still seems high, there are programs that allow qualified buyers to purchase a home with a down payment as low as 3.5%. VA loans and USDA loans don’t require a down payment for qualified applicants. You may even qualify for a local down payment assistance program. This is where working with a trusted lender will come in handy. An experienced lender will analyze your personal financial situation and goals to carefully guide you on your homebuying journey.
Whether you’re anxious to take advantage of the low rates, or just sick of renting, don’t let down payment myths keep you from hitting your homeownership goals! If you’re hoping to buy a home this year, connect with our team today to see the best options for you.