Do You Need To Put 20% Down?

Do You Need To Put 20% Down?

If you’re planning to buy your first home, saving up for the costs involved can feel daunting, especially when it comes to the down payment. That might be because you’ve been told you need to put down 20% of the home’s price—but that isn’t necessarily the case.

Unless specified by your loan type or lender, it’s typically not required to put 20% down. That means you could achieve your homebuying dream sooner than you realize.

The Mortgage Reports states:

“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. In fact, for all homebuyers today, it’s only 15%. And it’s even lower for first-time homebuyers at just 8% (see graph below):

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

Learn About Resources That Can Help You Toward Your Goal

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 as well. FHA loans offer down payments as low as 3.5%, and VA and USDA loans have no down payment requirements for qualified applicants.

With multiple resources available to help with your down payment, consulting with a loan officer is the best way to find what you qualify for. Davis Homes’ financial lender knows about services and programs that can help you and is committed to matching you with your dream home within your budget.

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 at Davis Homes to find resources to help you make your dreams a reality. Putting your plans on hold until you’ve saved up 20% may cost you 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 keep appreciating 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. If you’re looking to make a move this year, let’s connect you with one of our loan officers to start the conversation and get you into your dream home.

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