A Damaging Down Payment Myth
You probably don’t have to put 20% down to buy a home. Here’s why.
Is the idea of saving for a large down payment holding you back from buying a home? You may be eager to take advantage of today’s low mortgage rates, but the thought of needing a huge down payment may make you want to slow down those plans. There’s still a myth circulating that you have to come up with 20% of the total sales price for your down payment. This means that people who could buy a house might be putting their plans on hold because they don’t have that much saved yet.
"There are programs that allow qualified buyers to purchase a home with a down payment of as little as 3.5%."
The reality is, whether you’re saving for your first property or you’ve purchased one before, you likely don’t need to put down 20%. According to Freddie Mac, this is the most damaging down payment myth because it stops the buying process before it begins. If saving that much seems daunting, people may give up on the dream of homeownership before they even look into it.
Data in the 2020 profile of homebuyers and sellers from the National Association of Realtors indicates that the median down payment hasn’t been 20% since 2005. Even then, that was for repeat buyers, not first-time homebuyers. The average amount that first-time buyers spent on a down payment in 2020 was just 7%. This might still seem high, but there are programs that allow qualified buyers to purchase a home with a down payment of as little as 3.5%. VA and USDA loans with no down payment requirements also exist for qualified applicants.
So no, you don’t need to put 20% down to buy, but you still need to do your homework to learn the options available to you. Make sure to work with trusted professionals from the beginning to learn what you can qualify for in the home buying process. Don’t let this terrible down payment myth keep you from reaching your homeownership goals.
If you’re considering buying a house this year, let’s connect to review your options. If you have questions about this or anything else concerning real estate, call or email me. I would love to help you.