Need Help with Your Home Down Payment? There's Help Out There

Saving up for a home down payment can feel like a huge challenge. Especially for first-time buyers, figuring out how to gather that lump sum for a down payment might seem like climbing a mountain.

But, don't worry too much about getting together a full 20% of the home's price to put down, as there are many options out there that require much less.
 

The Reality of Home Affordability

Lately, buying a home has gotten tougher. Prices of homes have shot up by 47% since 2020, and this increase hasn't matched up with how much people earn.

Adding to that, costs like property taxes and insurance have also gone up. It's not surprising then that many people feel like now is a tough time to buy a home.

Even with mortgage rates hovering between 6.75% and 7%, they're not expected to drop significantly anytime soon.

This makes it even harder for first-time buyers and those who can't tap into the equity of an existing home for a down payment.
 

The Myth of the 20% Down Payment

Many people believe you need to put down 20% of a home's purchase price as a down payment, but that's not actually true. In fact, the average down payment ranges between just 6% and 10% for first-time buyers.

So, if you've been scared off by the idea of needing tens of thousands of dollars upfront, there's good news. There are plenty of low-down-payment options available to help you get into a home sooner.
 

How Can First-Time Buyers Get a Break?

For starters, the Federal Housing Administration (FHA) offers loans that only require a down payment of 3.5% if you have a decent credit score.

Many first-time buyers also go for conventional loans, which might ask for as little as 3% down. Veterans might qualify for VA loans that don't require any down payment at all.
 

But, What About the Extra Costs?

Most loans that let you put down less than 20% come with some strings attached, like needing to pay for mortgage insurance until your loan amount drops below a certain level.

And remember, the less you put down upfront, the higher your monthly payment will be since you're borrowing more.
 

Looking for Down Payment Help

There's good news if you're wondering how to come up with a down payment: Many programs exist to help out.

Whether it's state, local government, or nonprofit organizations, you could get assistance with your down payment and other costs like closing fees. Some programs even offer grants that you don't have to pay back.

Even if you're not a first-time buyer or you earn a decent income, there might be assistance for you. These programs can help you put down more upfront, which can lower your monthly payments and overall loan cost.
 

It's Worth a Look

Exploring down payment assistance programs can be an overlooked step for many prospective homebuyers.

Yet, for those who do, it can make a big difference. It might even be the push that turns your dream of homeownership into reality, making it possible to secure a mortgage you can afford.
 

Remember:

The landscape of buying a home can feel daunting, with affordability at its toughest in years. But with options for lower down payments and various assistance programs available, hopeful homeowners have resources to tackle these challenges.

-

Get updates on the latest articles about the housing and rental market. Click here to subscribe!