Do I Really Need A 20% Down Payment To Buy A Home?

Do I Really Need A 20% Down Payment to Buy A Home?

Is the idea of saving for a down payment holding you back from buying a home right now? There’s still a common myth that you have to come up with 20% of the sale price for your down payment. The reality is, whether you’re looking for your first home or you’ve purchased one before, you most likely don’t need to put 20% down. Here’s why:

According to Freddie Mac:

“The most damaging down payment myth—since it stops the homebuying process before it can start—is the belief that 20% is necessary.”

Data in the 2020 Profile of Home Buyers and Sellers from the National Association of Realtors (NAR) indicates that the median down payment hasn’t been over 20% since 2005. Even then, that was for repeat buyers, not first-time homebuyers. As the image below shows, today’s median down payment is far less than 20%.

What does this mean for potential homebuyers?

If you’re a first-time buyer and putting down 7% still seems high, understand that there are programs that allow qualified buyers to purchase a home with a down payment as low as 3.5%. There are even options like VA loans and USDA loans with no down-payment requirements for qualified applicants.

Potential homebuyers (whether they’re repeat or first-time buyers) need to know they likely don’t need 20% down, but they need to do their homework to understand the available options. Work with trusted professionals from the start to learn what you may qualify for in the homebuying process.

Bottom Line

Don’t let down payment myths keep you from hitting your homeownership goals. If you’re hoping to buy a home this year, let’s connect to review your options. Call or text me at 970-371-1318.