A large hurdle that homebuyers face is saving for a down payment. When it comes to budgeting and planning for your future home purchase, you’ll want to understand how much money you’ll need to put down, and how long that will take to save. This task might sound daunting, but the process could move faster than you think!
When utilizing data from the U.S Department of Housing and Urban Development (HUD) and Apartment List, about estimated median family incomes for Fiscal Year 2020 and the median rent, we can project how long it might take someone earning the median income and paying the median rent to save for a down payment on a median priced home. Saving for a down payment is mostly practicing budgeting for housing costs, therefore the estimate below uses the concept that a household should not pay more than 28% of their total income on monthly housing expenses.
While looking at the data, the national average time it will take to save for a 10% down payment is around two and a half years. The map below shows this time in years for each state:
What if you only need to save 3%?
You often hear that you need to put 20% down in order to buy a home, but this isn’t always the case. There are more affordable options and down payment assistance programs available to those who qualify, especially for first-time homebuyers. Saving for a 3% down payment could take less than a year to achieve. Check out the map below to see how long it could take you to save for a 3% down payment based on your state’s average.
Whether you are currently in the process of saving for a down payment or thinking about saving for a down payment, you might be closer to your dream home than you think! Connect with our experienced team today to explore the down payment options available to you. We would love to help you achieve your goal of homeownership!