How Much Do You Actually Need for a Downpayment?
As you set out on your home buying journey, you likely have a plan in place, and you’re working on saving for your purchase. But do you know how much you actually need for your down payment? A lot of people start saving to purchase a home before they’ve even talked to a lender, which is a great proactive first step, but if you think you have to put 20% down, you may want to think again because that might not be the case.
Freddie Mac says:
“The most damaging down payment myth—since it stops the homebuying process before it can start—is the belief that 20% is necessary.”
Unless specified by your loan type or lender, it’s typically not required to put 20% down. According to the National Association of Realtors, the median down payment hasn’t been over 20% since 2005. It may sound surprising, but today, that number is only 13%. And it’s even lower for first-time homebuyers, whose median down payment is only 7%. And of course, there are a number of programs with downpayments that are even lower than that.
If you’re interested in learning more about low downpayment options, there are several available. There are programs for qualified buyers with down payments as low as 3.5%, as well as options like VA loans and USDA loans with 0% down for qualified applicants.
There are some benefits to putting 20% down, but the typical buyer is putting far less down. That’s good news for you because it means you could be closer to your homebuying dream than you realize. A lender will walk you through the pros and cons of the various loan programs available and help you find the program that works best for you and your specific situation.
Bottom line- it isn’t always necessary to put 20% down and as always, meeting with a lender early in your home buying process is a smart idea. If you don’t have a lender, let us know so we can connect you with a local lender that knows our Daytona Beach market.