April 23rd, 2019 8:32 AM by Jackie A. Graves, President
As we mapped out in our homebuying timeline, understanding what you
can afford is key, and this includes your down payment. If you're like most,
your down payment is top of mind as you embark on your homebuying journey.
Whatever you do, don't hang a white towel from your window just yet.
might be easier than you think once you understand your options and the two key
You don't need a 20% down payment. This
is one of the biggest misconceptions in the market, with many homebuyers
putting down significantly less. In fact, the average down payment for
first-time homebuyers is 5%, according to the National Association of
Realtors®. Plus, options like our Home Possible® mortgage allows qualified
borrowers to put down as little as 3%.
Putting down less than 20% means you'll be required to pay private mortgage insurance (PMI). However, if
putting 20% down is not an option or will deplete all your savings and leave
you with no financial cushion, it's probably not in your best interest. Plus,
once you've built equity of 20% in your home, you can cancel your PMI.
Assistance is available. Pulling
together enough money for a down payment may be a challenge, but the funds
don't necessarily need to come from your savings account, nor do you have to do
With many of today's mortgage
options, your down payment can come from a variety of sources other than
personal savings, including gifts from your family or employer. For many
homebuyers, this is a huge bonus.
There are also hundreds of
programs across the nation that provide down payment assistance, with eligibility
requirements varying based on your location, income and other criteria. Check
out Down Payment Resources' handy online tool, or explore HUD's listing of
available programs by state. The down payment
program benefit is typically around $10,000, perhaps enough to get your funds.
homeownership is out of reach because of the down payment. Get savvy and rev up
your engine! There are many programs and products that can help you realize
your dream of homeownership. Learn more about down payments, down payment assistance options and be
sure to follow our spring homebuying blog series.