How Much Do You Need for Your Down Payment?
If you’ve been thinking of buying a home, you’re likely working on saving for your purchase. But do you know how much you actually need for a down payment?
If you think you have to put 20% down, you may have set your goal based on a common misconception. Freddie Mac says:
“The most damaging down payment myth–since it stops the homebuying process before it can start–is the belief that 20% is necessary.”
Unless your loan type or lender specifies, it’s typically not required to put 20% down. According to the Profile of Home Buyers and Sellers from the National Association of Realtors (NAR), the median down payment hasn’t been over 20% since 2005. It may be surprising, but today, that number is only 13%! And it’s even lower for first-time homebuyers, which is only 7%:
What Does This Mean For You?
While a down payment of 20% does have benefits, the typical buyer is putting down far less. That’s good news for you because it means you could be closer to your homebuying goal than you realize.
If you’re interested in learning more about low down payment options, there are several places to go. There are programs for qualified buyers with down payments as low as 3.5%. There are also options like VA loans and USDA loans with no down payment requirements for qualified applicants.
To understand your options, you need to do your homework. If you’re interested in learning more about down payment assistance programs, information is available through sites like downpaymentresource.com. Be sure to also work with a real estate advisor from the start to learn what you may qualify for in the homebuying process.