Are misconceptions about down payments keeping you from buying a home? Many first-time homebuyers think they need a substantial down payment in order to purchase a home. According to recent data from the National Association of REALTORS®, 35 percent of consumers believe that they need between 16 percent and 20 percent of a home’s purchase price for a down payment—and another 10 percent of consumers think they need more than a 20 percent down payment when buying a home.
But is that actually true? Do you actually need a high down payment in order to buy your first home?
As it turns out—maybe not.
While every home sale is different, most first-time buyers put significantly less than 20 percent towards their down payment. They are still able to successfully purchase a home. According to NAR’s data, since 2018, the average down payment for first-time homebuyers has fallen to between 6 percent and 7 percent. This is why it is VERY important for you to talk with your Realtor. And the most important issue is to find a local lender in your area that will explain all the different loan programs that are available to first time buyers.
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Saving up 6 to 7 percent of a home’s purchase price is a lot more attainable than 20 percent. So, if you’ve put off purchasing a home because you thought you needed 20 percent (or more!) as a down payment, it may be time to let go of that misconception, reconsider your strategy, and start thinking about buying your dream home.