How Much Do You Know About Down Payments?

Whether you’ve owned a home before, or you’re readyto jump into homeownership for the first time, there are always alot of questions swirling around about what is truly required for adown payment, and how to best source down payment assistance.Let’s tackle these two today.

How Much Do You Really Need for A DownPayment?

There is a long-standing misconception about down paymentrequirements. A survey from Fannie Mae showsonly 17% of consumers know the minimum options are actually between1 – 5% of the purchase price and 40% don’t know howmuch they need at all.

There are many mortgage loans available thatrequire as little as 3% down for first-time buyers, and some askfor only 3.5% down from repeat buyers. There are even loansavailable for Veterans that provide 0% down payment optionstoo.

We’ve mentioned recently that you don’t need to comeup with a 20% down payment to buy, andwe’ve also shared how quickly you can save for a 3% or10% down payment, depending on where you live. If you’replanning to put down just 3%, the research shows it may be possiblein most states to have enough saved for a down payment in less thana year. That puts homeownership in a much closer reach for manypotential buyers, maybe even you!

How Can I Get Help with My Down Payment?

Regardless of the loans available, many buyers still needassistance with a down payment. The great news is, there are a lotof ways to tap into down payment assistance options. Here are justa couple of them:

Assistance from Family Members

The National Association ofRealtors (NAR) said,“a third of recent first-time buyers received downpayment assistance from family members.” They alsomentioned, “the average net worth of those aged 75 andover stands at $264,800…They just might offer the boost thenext generation needs to become homeowners.”

That means one of the ways to find help with a down payment isto accept a gift from a family member. If this is an option foryou, make sure you talk to your loan officer before you accept themoney, to ensure you document the process the way it is required byyour loan. This way, it will be received properly and you can stillpotentially qualify.

Down Payment Assistance Programs

The reality is, not everyone has a loved one or a family memberwho can provide help with a down payment. There are, however, morethan 2,500 down payment assistance programs available(by local areas like city, county, or neighborhood), and some ofthem are even specifically for first-time buyers.

The gap, as mentioned in the same survey, is “only 23%of consumers are familiar with low down paymentprograms.”

That’s why it is so important to get familiar with theseoptions by doing your homework before you plan to buy a home.Determine what is available in the area where you ultimately wantto live, so you have all the details you need to take advantage ofthe down payment assistance option that is best for yourfamily.

Bottom Line

If buying a home is one of your long-term goals, you may be ableto get there sooner than you think by tapping into one of the manydown payment assistance programs available.