Need to know about saving for a down payment? Here's the essential information.

If you're in the process of purchasing your first home, your main focus is likely on saving for the various expenses associated with such a significant investment. One particular cost that might concern you is the down payment. Feeling overwhelmed by the substantial amount you need to save? Don't worry, you don't necessarily have to put down 20%. The National Association of Realtors (NAR) provides valuable insight on this matter.

"Among housing consumers, there is a prevalent misunderstanding regarding the typical down payment and the required amount to become a homeowner."

And a recent Freddie Mac survey finds:

"Close to 33% of potential homebuyers mistakenly believe that a down payment of 20% or more is necessary to purchase a home. This misconception continues to be one of the major perceived obstacles in attaining homeownership."

Here's some positive information for you: In most cases, unless your loan type or lender explicitly states otherwise, there is usually no requirement to make a 20% down payment. This means that you may be much closer to achieving your dream of homeownership than you realize.

According to the National Association of Realtors (NAR), the median down payment has remained below 20% since 2005. In fact, the median down payment for all homebuyers today is only 14%. Additionally, first-time homebuyers have an even lower median down payment, with it being just 6%. Take a look at the graph below for a visual representation of these figures:

What implications does this have for you? It implies that you might not have to save as much money as you initially anticipated.

Learn About Options That Can Help You Toward Your Goal

It's not just the amount required for your down payment that lacks clarity; there are also misunderstandings surrounding down payment assistance programs. To begin with, numerous individuals assume that such assistance is solely available for first-time homebuyers. While first-time buyers indeed have several options to consider, there are also opportunities for repeat buyers.

Down Payment Resource reports that there are more than 2,000 homebuyer assistance programs throughout the United States, with the majority specifically designed to aid with down payments. The same resource further adds:

"You don't necessarily have to be a first-time buyer. In fact, more than 38% of all available programs cater to repeat homebuyers who have owned a home within the past 3 years."

Moreover, there are loan types available that offer low down payment options. For instance, FHA loans allow down payments as low as 3.5%, and there are also options such as VA loans and USDA loans that do not have any down payment requirements for eligible applicants.

If you want to gather more information about down payment assistance programs, you can explore resources like Down Payment Resource. Afterward, it's advisable to team up with a reliable lender who can guide you in understanding the options you qualify for on your journey to homeownership.

Bottom Line

Keep in mind that a 20% down payment is not always obligatory. If you have plans to buy a home within this year, it would be beneficial to contact a trustworthy real estate professional and initiate a discussion about your homebuying objectives.