According to Google Trends, online searches for down payment information recently hit an all-time high. And that’s a clear sign more buyers are trying to figure out what they really need to save before making a move (see graph below):
If you’re wondering the same thing, you can always turn to the internet for answers. But a lot of the time, it’s better to ask a local expert. Because here’s what a pro would tell you.
The 20% Down Payment Myth
The idea that you need 20% down to buy a home is one of the biggest misconceptions around the homebuying process. And the data debunks the myth.
While there are benefits to putting that much money down, most first-time buyers put down far less.
Here’s why. Unless it’s stated by your lender, you typically don’t have to have a 20% down payment. There are even some loan options designed to help you get into a home with a much smaller upfront cost. As the Mortgage Reports explains:
“The amount you need to put down will depend on a variety of factors, including the loan type and your financial goals. If you don’t have a large down payment saved up, don’t worry—there are plenty of options available, and you don’t need to put down the traditional 20% . . . many homebuyers are able to secure a home with as little as 3% or even no down payment at all . . .”
For example, FHA loans allow down payments as low as 3.5%, while VA and USDA loans offer zero down payment options for qualified applicants, like Veterans.
And those options are just one reason so many first-time buyers are able to buy without a 20% down payment.
What Buyers Are Actually Putting Down
So, if buyers aren’t doing 20%, how much do they actually put down?
According to the National Association of Realtors (NAR), the median down payment for first-time homebuyers is only 10%. That’s half of what you probably expected.
That means if you’re aiming to save 20% because you think you have to, you may be setting a timeline that’s longer than necessary.
And here’s some more good news. It’s not only that you may be able to buy with less money down than you thought, but there are also options to help you get to your down payment goal even faster.
Why You Should Look into Down Payment Assistance Programs
There are a lot of programs designed to help you save for a down payment – and they can make a big difference in how fast you hit your savings target. Unfortunately, buyers don’t realize how many there are, or that they may qualify for help.
Research from Realtor.com shows almost 80% of first-time homebuyers qualify for down payment assistance (DPA), but only 13% actually use it (see chart below):
And that’s another big miss holding would-be buyers like you back.
In the U.S., there are over 2,600 homeownership programs available, many offering significant financial support. As Down Payment Resource shares:
“With an average benefit of $18,000, down payment assistance (DPA) remains one of the most essential tools for addressing the nation’s affordability challenges. Programs continue to expand in scope, serving a broader range of incomes, property types and borrower needs, including first-generation, military and repeat buyers.”
Imagine how much further your savings could go with an extra $18,000 you can use to buy. In some cases, you may even be able to stack multiple programs, giving what you’ve saved an even bigger boost.
FAQs About Down Payments for First-Time Buyers
Do you really need a 20% down payment to buy a house?
No. Many first-time homebuyers purchase homes with much smaller down payments depending on the loan program they use.
What is the average down payment for first-time homebuyers?
According to the National Association of Realtors, the median down payment for first-time buyers is around 10%.
Can you buy a house with 3% down?
Yes. Some conventional loan programs allow qualified buyers to purchase a home with as little as 3% down.
What loans offer low or zero down payment options?
FHA loans can allow down payments as low as 3.5%, while VA and USDA loans may offer zero down payment options for eligible buyers.
What is down payment assistance?
Down payment assistance programs provide grants, loans, or financial help to qualified homebuyers to reduce upfront costs.
Who qualifies for down payment assistance programs?
Qualification depends on income, location, loan type, occupation, military status, and other factors. Many first-time buyers may qualify without realizing it.
Can you combine multiple down payment assistance programs?
In some cases, yes. Certain buyers may qualify for multiple assistance programs to reduce their upfront costs even further.
Key Takeaways
- Most first-time buyers do not put 20% down.
- Some loan programs allow down payments as low as 3% or even 0% for qualified buyers.
- Down payment assistance programs may help reduce upfront costs.
- Many buyers qualify for assistance without realizing it.
- Talking with a lender can help you understand your real options sooner than expected.
Bottom Line
The simple truth is: most first-time buyers don’t put 20% down. And if you’ve been waiting to buy until you have that saved, you may be setting a timeline that’s longer than necessary.
Wondering how much you really need to buy a home? A trusted lender or local real estate expert can help you explore loan options, down payment assistance programs, and what may be possible based on your goals and budget.
To find out what you really need to save and if you qualify for any help, connect with a trusted lender who can walk you through your options. You may be able to buy sooner than you thought.
Courtesy of Keeping Current Matters
The Truth About the 20% Down Payment Myth, Low Down Payment Mortgage Options, First-Time Homebuyer Assistance Programs, How To Buy a Home With Less Money Down, What First-Time Buyers Should Know About Down Payments, Ways To Save on Upfront Homebuying Costs
