February 9th, 2021
Are you wanting to take advantage of these low interest rates in 2021 but not sure if you can afford the down payment? According to Freddie Mac, “the most damaging down payment myth – since it stops the home buying process before it can start – is the belief that 20% is necessary.” Whether you are a first-time home buyer or a repeat buyer, you most likely do not need to put 20% down.
“Data in the 2020 Profile of Home Buyers and Sellers from the National Association of Realtors (NAR) indicates that the median down payment actually hasn’t been over 20% since 2005, and even then, that was for repeat buyers, not first-time home buyers.”
As shown in the graph below we can see that the median down payment is 7% for first-time home buyers, 12% for all home buyers, and 16% for repeat home buyers. If you are a first-time home buyer and still think that 7% is a lot to save up for a down payment there are many programs out there allowing you to put as little as 3.5% down. There are even VA and USDA loans that require no down payments for qualified individuals.
It it important to realize that a 20% down payment will most likely not be required for the purchase of a home and working with a real estate professional who can connect you with local lenders is a great way to get started.