If you’re in the process of purchasing your first home, your main goal is likely to save for the various expenses associated with such a significant investment. Among these costs, your down payment might be the most prominent on your mind. If you feel overwhelmed by the amount you need to save, it could be because you think you must provide a 20% down payment. That doesn’t necessarily have to be the case, it is a common misconception.
Here’s the good news. Unless explicitly stated by your lender or determined by the type of loan you’re applying for, there is generally no obligation to provide a 20% down payment. This means that you might be much closer to achieving your dream of buying a home than you think. According to the National Association of Realtors (NAR), the median down payment has not exceeded 20% since 2005. In reality, the median down payment for all homebuyers today is only 14%. Furthermore, for first-time homebuyers, the median down payment is as low as 6%.
What does this imply for you? It suggests that you might not have to accumulate as much savings as you initially believed.
Learn About Options That Can Help You Toward Your Goal
Not only is it unclear how much you need for your down payment, but there are also misunderstandings regarding down payment assistance programs. Many people mistakenly believe that such assistance is only available for first-time homebuyers. While first-time buyers do have various options to explore, repeat buyers also have some assistance programs available to them.
According to Down Payment Resource, there are over 2,000 homebuyer assistance programs in the United States, and the majority of these programs aim to assist with down payments. Furthermore, there are loan types such as FHA loans, which require down payments as low as 3.5%, as well as options like VA loans and USDA loans that don’t have any down payment requirements for qualified applicants.
If you’re interested in discovering more about down payment assistance programs, you can find information on websites like Down Payment Resource. Additionally, it is advisable to collaborate with a reliable lender to determine what you qualify for on your journey to buying a home.
Bottom Line
Keep in mind that a 20% down payment is not always obligatory. If you’re planning to buy a home this year, let’s get in touch and start a discussion about your home buying goals.
