Here’s the truth about down payments when it comes to buying a new home..

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 probably heard that you’ll need to save 20% of the home’s price to put up for a downpayment. Well, although sometimes that can be true, it isn’t necessarily always the case.

Unless specified by your loan type or lender, it’s typically not required to put the full 20% down. That great news because you could be much closer to the keys to your dream-home than you realize! 

As The Mortgage Reports says:

“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. Crazy right? In fact, for all homebuyers today it’s only 15%! And it’s even lower for first-time homebuyers at just 8%. 

The big takeaway? You may not need to put forward as much as you originally thought.

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 for 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 agent. They know about local grants and loan programs that may help you out. Don’t have one quite yet? Hi, I’m Taylor and I’m here to help. 🫶🏼

The point is.. 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 more 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 continue to appreciate 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.

The Bottom Line is..

Just remember that you don’t always need a 20% down payment to buy a home. You have options!  If you’re looking to make a move this year in or around the St/ Croix Valley, let’s connect to start the conversation about your home buying goals to get you prepped and planning ahead for a seamless process.