As you think about buying a home, saving for a down payment is likely top of mind. But you may still have questions about the process, including how much to save and where to start. If that sounds like you, your down payment could be easier obtained than you originally thought.
Here’s why. The 20% Down Payment Myth If you believe you have to put 20% down on a home, you may have based your goal on a common misconception. Freddie Macexplains: “. . . 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 it’s specified by your loan type or lender, it’s typically not required to put 20% down. According to the latest Profile of Home Buyers and Sellers from the National Association of Realtors (NAR), the median down payment hasn’t been over 20% since 2005. There are even loan types, like FHA loans, with down payments as low as 3.5%, as well as options like VA loans and USDA loans with no down payment requirements for qualified applicants.
This is good news for you because it means you could be closer to your home-buying dream than you realize.
Down Payment Assistance Programs Can Be a Game Changer According to latest Homeownership Program Index from downpaymentresource.com, there are over 2,000 homebuyer assistance programs in the U.S., and the majority are intended to help with down payments. A recent article explains why programs like these are helpful: “These resources can immediately build your home buying power and help you take action sooner than you thought possible.” And if you’re wondering if you have to be a first-time buyer to qualify for these programs, that’s not always the case. According to an article from downpaymentresource.com: “It is a common misconception that homebuyer assistance is only available to first-time homebuyers, however, 38% of homebuyer assistance programs in Q1 2022 did not have a first-time homebuyer requirement.” There are also location and profession-based programs you could qualify for as well.
Bottom LineSaving for your down payment is an important first step on your home-buying journey. Let’s connect today and make sure you have a trusted lender to help explore your options.
Diana Alexander, a member of the Houston Association of REALTORS®, Certified Real Estate Negotiation Expert, and Property Manager provides real estate services and trending real estate awareness.