What You Need to Know About Saving for a Down Payment

What You Need to Know About Saving for a Down Payment

If you're a first-time homebuyer, you may be focused on saving for the various costs involved in such a significant purchase. Your down payment is likely one of the expenses that concern you the most. However, the National Association of Realtors (NAR) highlights a common misconception:

"One of the biggest misconceptions among housing consumers is what the typical down payment is and what amount is needed to enter homeownership."

According to a recent Freddie Mac survey, nearly one-third of prospective homebuyers believe they need a down payment of 20% or more, which is a myth that hinders homeownership opportunities.

Fortunately, it's typically not required to put down 20% unless specified by your loan type or lender. This means you may be closer to achieving your dream of homeownership than you think.

NAR states that the median down payment has not exceeded 20% since 2005. In reality, the median down payment for all homebuyers today is only 14%, and it's even lower at 6% for first-time homebuyers. This suggests that you may not need to save as much as you initially believed.

It's important to familiarize yourself with options that can help you reach your goal. Down payment assistance programs are often misunderstood. While there are many options available for first-time homebuyers, repeat buyers also have access to assistance.

According to Down Payment Resource, there are over 2,000 homebuyer assistance programs in the U.S., and the majority of them aim to help with down payments. Contrary to popular belief, these programs are not exclusively for first-time buyers. In fact, over 38% of all programs are designed for repeat homebuyers who have owned a home in the last three years.

Additionally, there are loan types such as FHA loans with down payments as low as 3.5%, as well as VA loans and USDA loans with no down payment requirements for qualified applicants.

If you're interested in learning more about down payment assistance programs, resources like Down Payment Resource can provide valuable information. To determine your eligibility on your homebuying journey, it's recommended to partner with a trusted lender.

Remember, a 20% down payment is not always necessary. If you're looking to purchase a home this year, reach out to a reliable real estate professional to start discussing your home-buying goals.