How Much Money Do You Actually Need for Your Down Payment?
And what can you expect to pay for the median house price.
One of the biggest misconceptions for first-time homebuyers is how much you’ll need to save for a down payment. Contrary to popular belief, you don’t always have to put 20% down to buy a house. Here’s how it breaks down.
A recent survey by Point2Homes mentions that 74% of millennials (ages 25-40) say they’re interested in purchasing a home over the next 12 months. The study notes, “88% say they have significantly less savings than the average national down payment amount, which is $62,600.”
$62,600 is not the amount every buyer needs for a down payment in the United States. There are many different options available, especially for first-time homebuyers. That amount can also be significantly less, depending on the purchase price of the house.
According to the National Association of Realtors (NAR), “The median existing-home price for all housing types in August was $310,600.” (These are the latest numbers available). NAR also indicates that:
“In 2019, the median down payment was 12 percent for all buyers, six percent for first-time buyers, and 16 percent for repeat buyers.”
Knowing there are also programs like FHA where the down payment can be as low as 3.5% of the purchase price for a first-time buyer, that up-front cost could be significantly less – as little as $10,871 for the same home noted above. There are also other programs like USDA and loans for Veterans that waive down payment requirements.
The Point2Homes study also shares how much millennials have indicated they’ve saved for a down payment. According to the study, According to the study,, 39% have already saved enough for a down payment on a median-priced home. Another 47% are close to reaching that goal, depending on the purchase price of the home.
To Summarize
There is a lack of information surrounding the home buying process and resources available. This is leading to many feeling discouraged to take the leap. That’s why a trusted agent and your lender can guide you through the process.
h/t to Keeping Current Matters
