Breaking Down the Myths: Navigating Homebuying with Less Than 20% Down Payment

Thinking of buying your first home but worried about saving for a hefty down payment? You might be relieved to know that the common belief of needing a 20% down payment isn't always true.

Many loans and lenders don't require a 20% down payment. As The Mortgage Reports highlights, while a 20% down payment can help you avoid mortgage insurance, it's not a must for most homebuyers. In fact, the National Association of Realtors (NAR) reports that the median down payment hasn't exceeded 20% since 2005. Today, the average down payment is 15% for all homebuyers and just 8% for first-time buyers.

The good news doesn't stop there. There are over 2,000 homebuyer assistance programs across the U.S. that can help with down payments. Plus, options like FHA loans require as little as 3.5% down, and VA and USDA loans may have no down payment requirements for eligible applicants.

To explore these opportunities, talk to your loan officer or broker. They can guide you to local grants and loan programs that could make your homebuying journey more accessible.

Don't let the myth of needing a 20% down payment hold you back from homeownership. Waiting to save that much could actually cost you more in the long run, as home prices are expected to continue rising over the next five years. Buying now with a smaller down payment can help you start building equity sooner.

Bottom Line: A 20% down payment isn't mandatory for buying a home. If you're considering a move this year, let's discuss your homebuying goals and find the best path forward for you.

 

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