The truth behind the common myth that buyers need a 20% down payment.
One common belief in real estate is that you need a 20% down payment to purchase a home. However, is that based on facts? I did some research on this that I thought was very interesting, so I’m sharing it with you today.
To start, I have a great quote from Freddie Mac, which is a company that handles a lot of the financing in our market nationwide. The quote goes: “The most damaging down payment myth—since it stops the home buying process before it can start—is the belief that 20% is necessary.” In reality, the nationwide average for first-time homebuyers is a 7% down payment and 16% for repeat buyers. Isn’t it odd that no one in the majority put 20% down?
In addition to these lower numbers, there are programs for specific groups of people. Government loans like VA and USDA loans require different down payments. If you are VA-qualified, you can get a home with no down payment. Also, if you’re in certain areas of the state, you can use USDA loans, which also sometimes come with no down payment.
Therefore, this is what first-time homebuyers should think about—a down payment may seem challenging, but there are federal and bank programs that help people like you pay closing costs.
The bottom line is don’t let this down payment myth keep you from purchasing or hitting your goals. I think you’ll find that as we get into 2023, you’ll have more opportunities for homes on the market, so now is a great time to get pre-approved.
I can help you do the math to determine what your bottom line is. If you want help with that, have any questions, or want help buying a home, call, text, or email me. I’d love to help you!