Is the idea of saving for a downpayment holding you back from buying a home right now? You may be eager to take advantage of today's low mortgage rates, but the thought of making a large downpayment may make you want to pump the brakes. Today there is still a common myth that you have to come up with 20% of the total sales price for your downpayment. This means that people that could buy a home may be putting their plans on hold becasue they haven't saved enough yet. The reality is, whether you're a first time home buyer or you've purchased one before, you most likely do not need to put 20% down.
Data in the 2020 Profie of Home Buyers and Sellers from the National Association of Realtors indicates that the median downpayment actually hasn't been over 20% since 2005 and even then, that was for repet buyers-- not first time home buyers.
The median down payment was lowest for first time homebuyers with the 2020 percentage coming in around 7%. If you're a first time homebuyer, 7% may still seem high but, understand there are programs out there that allow qualified buyers to make a down payment of as little as 3.5%. There are even options such as VA or USDA loans with no down payment requirements for qualified applicants.
It's important for home buyers (first time or repeat) to know they likely do not need to put down 20% of the total sales price. However, they do need to do their homework to understand the options that may be available to them. Be sure to work with trusted professionals from the start to learn what you may qualify for in the homebuying process.
Don't let down payment myths stop you from achieving your goal of home ownership. If you're hoping to buy a home this year, let's connect to review your options!