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  • The Mullin Group

Saving for a Down Payment? Here’s What You Need To Know.

If you're eagerly planning on buying your first home, you're likely focused on saving up for all the expenses that come with such a big purchase. Among these costs, the down payment may be one of your main concerns. It's possible that you feel overwhelmed by the idea of having to save a whopping 20% for the down payment. But fear not! That doesn’t necessarily have to be the case. As the National Association of Realtors (NAR) notes:

One of the biggest misconceptions among housing consumers is what the typical down payment is and what amount is needed to enter homeownership.”

And a recent Freddie Mac survey finds:

. . . 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.”

Here's the good news. Unless specified by your loan type or lender, putting down 20% is typically not a requirement. This means you could be much closer to achieving your dream of homeownership than you realize.

According to the National Association of Realtors (NAR), the median down payment hasn't exceeded 20% since 2005. In fact, the median down payment for all homebuyers today stands at a mere 14%. For first-time homebuyers, it's even lower, averaging just 6% (see graph below):

What does this mean for you? It means you may not need to save as much as you initially thought.

Learn About Options That Can Help You Toward Your Goal

Furthermore, it's not just the amount needed for your down payment that lacks clarity. Down payment assistance programs also have many misconceptions surrounding them. Mainly, many people believe these programs are only available for first-time homebuyers. It is true that first-time homebuyers have many options to explore, but repeat buyers also have some, too.

According to Down Payment Resource, there are over 2,000 homebuyer assistance programs in the U.S., and the majority are intended to help with down payments. That same resource goes on to say:

You don’t have to be a first-time buyer. Over 38% of all programs are for repeat homebuyers who have owned a home in the last 3 years.

Plus, 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. It is also even possible to fund your own down payment with creative solutions like loans from your own retirement accounts or gifts from family members.

You can learn more about down payment assistance programs through sites like Down Payment Resource. After looking into that, we suggest partnering with a trusted lender to learn what you qualify for on your homebuying journey.

The Mullin Message

It is important to remember that a 20% down payment isn’t always required. If you are looking to purchase a home this year, let’s connect so we can help craft some customized solutions that are right for your situation and help you create success on this journey.

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