Stop Stressing About Your Down Payment

Ready to buy a home, but the thought of a down payment is holding you back? You're not alone. The worry can be overwhelming, leading you to believe that you'll "never save enough" or "rent forever." The truth is, a lot of what you've heard about down payments just isn't accurate. Once you know the facts, you might find that homeownership is closer than you think.

Let's break down some of the biggest down payment myths and get you on the right track.

Myth 1: You need a huge down payment.

Many people get stuck on this myth. A recent poll by Morning Consult and NeighborWorks found that 70% of Americans think they need to put at least 10% down to buy a home. And 11% aren’t sure what’s required at all (see graph below):

The reality is different. The National Association of Realtors (NAR) reports that the typical down payment for first-time homebuyers has been between 6% and 9% since 2018.

Even better, there are options that can drastically reduce that amount. For example, if you qualify for an FHA loan, you might only need to put 3.5% down. And VA loans often don’t require a down payment at all. There are many options out there that can make a huge difference for buyers.

Myth 2: Saving for a down payment takes forever.

Saving for a down payment takes time, but it may not be as long as you think. When you have a clear budget and a savings plan, reaching your goal can happen faster than you expect.

A new study shows that the time it takes to save for a 10% down payment varies by location. The map below shows the average number of years it takes to save up, based on typical home values and income levels in each state (see map below):

But remember, you likely won't even need a full 10% down payment. Plus, the money doesn’t all have to come from your pocket. Which brings us to the next myth...

Myth 3: You have to do it all on your own.

This is arguably the biggest myth of all. There are thousands of down payment assistance programs available, yet the same Morning Consult and NeighborWorks poll found that 39% of people don’t even know they exist. This means a lot of potential homebuyers could already be closer to owning a home—they just don’t know it.

These programs are designed to help people like you who are ready for homeownership but need a little extra support to get 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 you've been putting off buying a home because the down payment feels impossible, it's time to get the facts. You may not need as much as you think, and you certainly don't have to do it all on your own. Let's talk about your options and get you pointed in the right direction.

If a down payment wasn’t holding you back, would you be ready to start your home search?