Wondering How Much You Need To Save for a Down Payment?

Wondering How Much You Need To Save for a Down Payment?

If you're getting ready to buy your first home, you're probably focused on saving up for everything that comes with that purchase. Your down payment is probably the most important cost on your mind. But don't let a common misconception about how much money you need to save make the process more difficult than it needs to be.

Understand 20% Isn’t Always the Typical Down Payment
Freddie Mac explains:

“. . . nearly a third of prospective homebuyers think they need a down payment of 20% or more to buy a home. This myth remains one of the largest perceived barriers to achieving homeownership.”

Unless your loan type or lender requires it, putting down 20% is usually not required. This means you may be closer to realizing your dream of owning a home than you realize. The median down payment has not exceeded 20% since 2005, according to the National Association of Realtors (NAR). In fact, the current median down payment is only 14%. It's even lower for first-time buyers, who pay only 6% (see graph below):

Learn About Options That Can Help You Toward Your Goal

If saving for a down payment still seems difficult, know that there is assistance available. A trusted lender and a real estate professional can show you options that could help you get closer to your down payment goal. According to the most recent Homeownership Program Index from Down Payment Resource, there are over 2,000 homebuyer assistance programs in the United States, with the majority assisting with down payments.

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

Do your homework to fully understand your options. If you want to learn more about down payment assistance programs, you can visit websites like Down Payment Resource. Then, work with a reputable lender to determine what you are eligible for on your homebuying journey.

In conclusion
Keep in mind that a 20% down payment is not always required. If you want to buy a home this year, contact a reputable real estate agent to begin the conversation and discuss your down payment options.

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