If you’re planning to buy your first home, saving up for all the costs involved can feel daunting, especially when it comes to the down payment. That might be because you’ve heard you need to save 20% of the home’s price to put down. Well, that isn’t necessarily the case.
Unless specified by your loan type or lender, it’s typically not required to put 20% down. That means you could be closer to your homebuying dream than you realize.
“Although putting down 20% to avoid mortgage insurance is wise if affordable, it’s a myth that this is always necessary. In fact, most people opt for a much lower down payment.”
According to the National Association of Realtors (NAR), the median down payment hasn’t been over 20% since 2005. In fact, for all homebuyers today it’s only 15%. And it’s even lower for first-time homebuyers at just 8% (see graph below):
The big takeaway? You may not need to save as much as you originally thought.
Learn About Resources That Can Help You Toward Your Goal
According to Down Payment Resource, there are also over 2,000 homebuyer assistance programs in the U.S., and many of them are intended to help with down payments.
Plus, there are loan options that can help too. For example, FHA loans offer down payments as low as 3.5%, while VA and USDA loans have no down payment requirements for qualified applicants.
With so many resources available to help with your down payment, the best way to find what you qualify for is by consulting with your loan officer or broker. They know about local grants and loan programs that may help you out.
Don’t let the misconception that you have to have 20% saved up hold you back. If you’re ready to become a homeowner, lean on the professionals to find resources that can help you make your dreams a reality. If you put your plans on hold until you’ve saved up 20%, it may actually cost you in the long run. According to U.S. Bank:
“. . . there are plenty of reasons why it might not be possible. For some, waiting to save up 20% for a down payment may “cost” too much time. While you’re saving for your down payment and paying rent, the price of your future home may go up.”
Home prices are expected to keep appreciating over the next 5 years – meaning your future home will likely go up in price the longer you wait. If you’re able to use these resources to buy now, that future price growth will help you build equity, rather than cost you more.
Bottom Line
Keep in mind that you don’t always need a 20% down payment to buy a home. If you’re looking to make a move this year, reach out to a trusted real estate professional to start the conversation about your homebuying goals.
Aaron Boone is a seasoned professional in the real estate industry, bringing a wealth of experience and a genuine commitment to helping individuals and families find their ideal homes. With a career that began in 2007, Aaron has established himself as a reliable and knowledgeable expert in the field, specializing in assisting people with relocation needs and seniors looking to downsize.
As a long-time resident of the community for over 30 years, Aaron possesses a deep understanding of the local market dynamics and trends. His educational background is equally impressive, holding degrees in education, human resources, and business management. This diverse foundation allows him to approach real estate with a comprehensive and well-rounded perspective.
Aaron’s professional journey has seen him excel in various facets of the real estate realm, including property management, marketing, technology solutions, accounting, and finance. His extensive skill set enables him to guide clients through the intricacies of buying or selling a home with confidence and efficiency.
What sets Aaron apart is his unwavering commitment to going above and beyond for his clients. He is known for being a compassionate and attentive advocate, offering support at every step of the real estate process. His approach is characterized by a unique blend of knowledge, care, and active listening.
Notably, Aaron is upfront and straightforward in his communication style. He believes in telling clients what they need to hear, not just what they want to hear, fostering a relationship built on trust and transparency. His ability to think outside the box allows him to find creative solutions to challenges that others might overlook.
In addition to his professional achievements, Aaron brings a folksy, down-to-earth approach to his work, making the journey to finding a dream home both enjoyable and stress-free. Whether it’s through his deep community roots, extensive expertise, or his genuine care for clients, Aaron Boone stands out as a dedicated and effective real estate professional.