How much down payment do you need to buy a home?

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When you think of buying a home someday, the first thing that probably comes to mind is putting down a large amount of cash for a down payment. But you probably don’t need as much money as you think.

The idea of ​​the standard 20% down payment goes back to that Great Depression, when mortgages were typically shorter than today’s 30-year term (and down payment requirements were often more than one-fifth of real estate costs). In the decades that followed, many government-backed mortgages required a 20% down payment.

That’s a shocking number at today’s prices. The typical home in the USA has an average price of around $400,000. Applying the 20% rule would mean you would need $80,000.

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Nearly 40% of Americans who don’t own a home cite a lack of savings for a down payment as a reason, according to a new study CNBC Your Money Poll conducted by SurveyMonkey. (In total, more than 4,300 U.S. adults were surveyed for the report at the end of August.)

But in reality, “the typical first-time buyer has a down payment well under 20%,” said Jessica Lautz, assistant chief economist and vice president for research at the National Association of Realtors.

According to Lautz, it’s more common for people to put down as little as 6% or 7% as a down payment on their first home. In the first quarter of 2023, the typical down payment for a single-family home was 7.5% of the average price. after to ATTOM, a real estate data company.

In this case, you would need about $24,000 for a mid-priced home in the US.

Better yet, there are programs that can help many aspiring homeowners spend even less money.

Some mortgages require a small or no down payment

According to experts, the federal government, states, banks and credit unions offer programs with less demanding down payment requirements than the 20% figure.

Some federally funded programs allow you to purchase a home with no deposit, or a very low one. The US Department of Agriculture, Federal Housing Administration, and Department of Veteran Affairs, among others, offer low down payment programs.

For homebuyers, affordability “just isn’t there,” says Danielle Hale of

Financial intuitions, meanwhile, also offer smaller options. US bank advertises a deposit only 3%. Zillow recently rolls a 1% down payment option in Arizona for eligible borrowers, with Zillow Home Loans matching an additional 2%.

Keep in mind that you will probably have to pay, as a down payment of less than 20% is considered riskier by the lender Mortgage Insurance if you can think of less. This is usually the case Cost According to Freddie Mac, they range from $30 to $70 per month for every $100,000 borrowed.

Homebuyer grants help cover some costs

DC Open Doors in Washington, DC, also offers down payment assistance. And HomeFirst is a program in New York that provides eligible residents with up to $100,000 towards their down payment or closing costs.

“First-time home buyers should know that resources are available,” said Wendi Redfern, senior vice president of single-family programs at the DC Housing Finance Agency.

People can visit to find state and local down payment assistance programs in their area, Lautz said. The Deposit resource The website also matches borrowers with options. How much down payment do you need to buy a home?

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