The Truth About Down Payments (Its Not What You Think)

Buying a home is exciting until you start thinking about the down payment. Thats when the worry can set in.

Ill never save enough.

I need a small fortune just to get started.

I guess Ill just rent forever.

Sound familiar? Youre not alone. And youre definitely not out of luck.

Heres the thing: a lot of what youve heard about down payments just isnt true. And once you know the facts, you might realize youre a lot closer to owning a home than you think.

Lets break it all down and bust some big down payment myths while were at it.

Myth 1: I need to come up with a big down payment.

This one stops a lot of people in their tracks. A recent poll from Morning Consult and NeighborWorks shows 70% of Americans think they need to put at least 10% down to buy a home. And 11% arent sure whats required at all (see graph below):

The truth? According to the National Association of Realtors (NAR), the typical down payment for first-time buyers has been between 6% and 9% since 2018. But theres more to the story. If you qualify for an FHA loan, you may only need to put 3.5% down. And VA loans typically dont require a down payment at all. So, there are options out there that can really make a difference for some buyers.

Myth 2: Itll take forever to save up for a down payment.

Sure, saving can take time. But it may not have to be as long as you think. In many states, reaching your goal can happen faster than you might expect, especially when you know your budget and have a clear savings plan.

According to a new study, the amount of time varies depending on where you live. The map below shows, on average, how many years it takes to save up for a 10% down payment based on typical home values and income levels in each state (see map below):

But remember, in most cases you wont even need a down payment as large as 10%. Plus, no matter how much money you end up putting down, it wont all have to come out of your pocket. Heres why.

Myth 3: I have to do it all on my own.

This is one of the biggest myths of all. The reality is, there are thousands of down payment assistance programs out there, and the same poll from Morning Consult and NeighborWorks shows 39% of people dont even know about them. That means a lot of potential homebuyers could already be closer to homeownership they just dont realize it.

These assistance programs are designed to help people like you who are ready to own a home but just need a little support getting started. As Miki Adams, President at CBC Mortgage Agency, explains:

With high interest rates and soaring home prices, down payment assistance is more essential than ever.

Bottom Line

If youve been putting off buying a home because the down payment feels like too much to tackle, talk to a local real estate agent. You may not need as much as you think, and there are plenty of resources out there, so you dont have to do it alone. You just need an expert to point you in the right direction.

If the down payment wasnt the thing holding you back, would you be ready to start your home search?