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How Much Do You Need To Save for a Down Payment?

Friday, January 6, 2023   /   by Laura Larson

How Much Do You Need To Save for a Down Payment?

If you're getting ready to purchase your first house, you're probably focusing on setting aside money for everything that the purchase entails. Your down payment is one expense that is probably top of mind. But don't make the process more difficult than it needs to be by blindly trusting a widespread myth about how much money you need for your down payment.

A 20% Down Payment Isn't Always Standard
Freddie Mac explains: “... 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.”

In general, it is not necessary to put 20% down unless your loan type or lender specifically states otherwise. Moreover, you might be closer than you think to realize your dream of owning a home. The median down payment hasn't exceeded 20% since 2005, according to the National Association of Realtors (NAR). In actuality, 14% is the current median down payment. And it goes down to 6% for first-time homebuyers.

Discover the Options That Can Lead You to Your Goal
If you're still having trouble saving for a down payment, be aware that assistance is available. You may be able to find choices that will bring you closer to your down payment target if you work with a reputable lender and real estate expert. Over 2,000 homebuyer assistance programs exist in the United States, the bulk of which are designed to assist with down payments, according to the most recent Homeownership Program Index from Down Payment Resource.

Additionally, there are financing programs like FHA loans that only require 3.5% down payments, as well as USDA loans and VA loans that don't require any down payments at all for qualified borrowers. Make sure to complete your research so that you are aware of your possibilities. Sites like Down Payment Resource have information regarding down payment help programs if you're interested in finding out more. After that, work with a reputable lender to find out your eligibility for a house loan.

Bottom Line
Keep in mind that a 20% down payment isn't always necessary. Contact Laura Larson to start the conversation and go over your down payment options if you want to buy a house this year.