The 20% Down Payment Myth, Debunked

Saving up to buy a home can feel a little intimidating, especially right now. And for many first-time buyers, the idea that you have to put 20% down can feel like a major roadblock.

But thats actually a common misconception. Heres the truth.

Do You Really Have To Put 20% Down When You Buy a Home?

Unless your specific loan type or lender requires it, odds are you wont have to put 20% down. There are loan options out there designed to help first-time buyers like you get in the door with a much smaller down payment.

For example, FHA loans offer down payments as low as 3.5%, while VA and USDA loans have no down payment requirements for qualified applicants, like Veterans. So, while putting down more money does have its benefits, its not essential. As The Mortgage Reports says:

. . . many homebuyers are able to secure a home with as little as 3% or even no down payment at all . . . the 20 percent down rule is really a myth.

According to the National Association of Realtors (NAR), the median down payment is a lot lower for first-time homebuyers at just 9% (see chart below):

The takeaway? You may not need to save as much as you originally thought.

And the best part is, there are also a lot of programs out there designed to give your down payment savings a boost. And chances are, youre not even aware theyre an option.

Why You Should Look into Down Payment Assistance Programs

Believe it or not, almost 80% of first-time homebuyers qualify for down payment assistance (DPA), but only 13% actually use it (see chart below):

Thats a lot of missed opportunity. These programs arent small-scale help, either. Some offer thousands of dollars that can go directly toward your down payment. As Rob Chrane, Founder and CEO of Down Payment Resource, shares:

Our data shows the average DPA benefit is roughly $17,000. That can be a nice jump-start for saving for a down payment and other costs of homeownership.

Imagine how much further your homebuying savings would go if you were able to qualify for $17,000 worth of help. In some cases, you may even be able to stack multiple programs at once, giving what youve saved an even bigger lift. These are the type of benefits you don't want to leave on the table.

Bottom Line

Saving up for your first home can feel like a lot, especially if youre still thinking you have to put 20% down. The truth is thats a common myth. Many loan options require much less, and there are even programs out there designed to boost your savings too.

To learn more about whats available and if youd qualify for any down payment assistance programs, talk to a trusted lender.

Venessa James - Broker Associate    

ABR, ALHS, CHMS, MCNE, LUXE, SFR, SRS  

Platinum Experience Group - KW Professionals 

(281) 889-8292 platinumexperiencegroup.com

Integrity, Experience, Results