Tami Savage, Realtor

Your Key to a New Lifestyle

  • Blog
  • About
  • Contact
  • Facebook
  • Instagram
  • LinkedIn
  • YouTube

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

February 3, 2021 By Tami Savage

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? You may be eager to take advantage of today’s low mortgage rates, but the thought of needing a large down payment might make you want to pump the brakes. Today, there’s still a common myth that you have to come up with 20% of the total sale price for your down payment. This means people who could buy a home may be putting their plans on hold because they don’t have that much saved yet. 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.”

If saving that much money sounds daunting, potential homebuyers might give up on the dream of homeownership before they even begin – but they don’t have to.

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 homebuyers. As the image below shows, today’s median down payment is clearly less than 20%.

Today's median down payment is less than 20%. First-time homebuyers median down payment is 7%. All homebuyers median down payment 12%. Repeat homebuyers median down payment is 16%. Source: NAR 2020 Profile of Homebuyers and Sellers.

What does this mean for potential homebuyers?

As we can see, the median down payment was lowest for first-time buyers with the 2020 percentage coming in at 7%. 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.

It’s important for potential homebuyers (whether they’re repeat or first-time buyers) to know they likely don’t need to put down 20% of the purchase price, but they do need to do their homework to understand the options available. Be sure to 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.

Tagged With: Buying Myths, Down Payments, First Time Home Buyers, For Buyers, Move-Up Buyers

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Free eGuide. Things to Consider When Selling Your House. Send me this eGuide.

Free eGuide. Things to Consider When Buying a Home. Send me this eGuide.

Tags

Baby Boomers Buying Myths Community Demographics Distressed Properties Downloadable Down Payments Events First Time Home Buyers Forbearances for buy For Buyers Foreclosures For Sale By Owners For Sellers FSBOs Generation X Generation Z Gen Z Home Design Home Trends Housing Market Updates Infographics Interest Rates Interview Investors Luxury Home Luxury Market Millennials Move-Up Buyers New Construction Pricing Remodel Rent vs Buy Selling Myths Senior Market Short Sales SOLD Tax Refund Video

About Me

I help homeowners find their new upgraded home in the Tampa Bay area. Read More…

Let’s Connect

727-282-4390 (mobile)

 

  • Email
  • Facebook
  • Instagram
  • LinkedIn
  • YouTube

Let me help you buy or sell your next home!

eXp Realty

Equal Opportunity Housing   Realtor Stellar MLS

Copyright © 2019+ Tami Savage LLC. All Rights Reserved.

DISCLAIMER: The information contained, and the opinions expressed, on this site are NOT intended to be construed as investment advice. Tami Savage LLC does NOT guarantee or warrant the accuracy or completeness of the information or opinions contained herein. Nothing herein should be construed as investment advice. You should ALWAYS conduct your own research and due diligence and obtain professional advice before making any investment decision. Tami Savage LLC will NOT be liable for any loss or damage caused by your reliance on the information or opinions contained herein.