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How Much Do You Need for Your Down Payment?

How Much Do You Need for Your Down Payment
by Kevyn Pitts - October 11, 2022

As you get started on the process of purchasing a home, you probably have had a game plan and are hard at work putting money away for the transaction. But are you aware of how much money is truly required for the down payment on the house?

If you believe that you need to put down twenty percent of the purchase price, you may have based your aim on a widespread misunderstanding. Freddie Mac says:

"The misconception that a twenty percent down payment is required is the most harmful down payment myth since it halts the process of purchasing a house before it can even begin."

Putting down 20% of the purchase price is not normally necessary unless otherwise stipulated by the type of loan or lender you work with. Since 2005, the National Association of Realtors (NAR) Profile of Home Buyers and Sellers has shown that the median down payment has never been more than 20% of the home's purchase price. It might come as a surprise to hear this, but that percentage is now only 13%. 

What Does This Mean for You?

Although there are advantages to making a down payment of at least 20% of the purchase price, the majority of buyers put far less money down. This is excellent news for you since it indicates that you may be closer to realizing your dream of purchasing a home than you now believe.

There are a number of locations that you can go to if you are interested in acquiring further knowledge regarding solutions requiring a minimum initial deposit. There are programs available to qualifying purchasers that need as little as a 3.5% initial payment. There are alternative choices available, such as VA loans and USDA loans, which do not need an upfront payment from applicants who meet the necessary criteria.

You need to perform your investigation in order to comprehend the alternatives available to you. There is plenty of information regarding programs that help with down payments that can be found on websites such as downpaymentresource.com if you are interested in learning more about them. During the process of purchasing a property, you should make it a point to consult with a real estate expert right from the beginning to find out what kinds of deals you could be eligible for.

Bottom Line

Keep in mind that a down payment of 20% is not always necessary. If you are considering buying a property this year, you should get in touch with a reliable real estate expert as soon as possible to begin the conversation and investigate the various choices for your down payment.

Author

  • Kevyn Pitts

    Kevyn was Rory's first protege and has proved himself worthy of his title as a real estate expert through his years of working in the company. He makes sure we get the latest real estate updates and shares his insight to our readers on which investments they should keep an eye on.

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