Putting money away to buy a house can be scary, especially right now. And the fact that you have to put down 20% can be a big surprise for many first-time buyers.
But that is a common misunderstanding. The truth is this.
Do You Really Have To Put 20% Down When You Buy a Home?
Most likely, you won’t have to put 20% down unless the loan type or lender asks for it. There are loans out there that can help people like you who are buying their first home get in with a much smaller down payment.
You can get an FHA loan with a down payment as low as 3.5%, and Veterans and USDA applicants don’t have to make a down payment for these loans. So, putting down more money isn’t necessary, but it can be helpful. This is what The Mortgage Reports says:
many people can buy a house with as little as 3% down or even no down payment at all. The 20% down rule is not true.
As shown in the chart below, the National Association of Realtors (NAR) says that the median down payment for first-time homebuyers is only 9%:
The main point? You might not need to save as much money as you thought.
And the best part is that there are a lot of programs that can help you save more for a down payment. Most likely, you don’t even know they’re an option.
Why You Should Look into Down Payment Assistance Programs
Don’t believe it? Nearly 80% of first-time homebuyers are eligible for down payment assistance (DPA), but only 13% use it (see chart below):
That’s a lot of chances that were lost. These programs also don’t help a small amount of people. Some offer tens of thousands of dollars that can be used right away for a down payment. Rob Chrane, the founder and CEO of Down Payment Resource, says:
“Our data shows that the typical DPA benefit is around $17,000.” That can really help you save for a down payment and other home-related costs.
Think about how much further your savings for a house would go if you could get $17,000 to help you out. You might even be able to stack more than one program at once, which would make what you’ve saved work even better. You don’t want to miss out on these kinds of benefits.
Bottom Line
It may seem like a lot of work to save for your first home, especially if you still think you need to put down 20%. Truth be told, that’s just a myth. There are many loans that require much less, and some even have programs that can help you save money.