10/29/24

It’s time to talk about an often misunderstood, dare we say, scary part of the homebuying process. Yes, we’re talking about saving for the down payment, just in time for Halloween.

The down payment is often a daunting hurdle for buyers of all kinds, particularly if you’re going through the process the first time. However, it doesn’t have to be. Here are three reasons why down payments on a house don’t have to be intimidating.

The 20% myth should be dead for good. For years, the notion that 20% down is a must has been perpetuated as the gold standard for homebuying. But that’s no longer the case, which is a truth worth repeating as much as possible. Many home loans require far less than that. Conventional loans often accept as little as 3% down, and FHA loans call for a 3.5% down payment. So, if you’re eyeing a $300,000 home, you might only need $9,000 down rather than the more intimidating $60,000.

Data shows down payments are getting less frightful. Now that we’ve covered the myth-busting portion of this topic, it’s worth noting that the average down payment made by all buyers rose as competition smoldered. However, there’s good news on that front, too, according to Realtor.com.

For the third quarter of this year, the median down payment was 14.5%, still less than 20%, and a significant decrease from a previous peak of almost 15%. (That may not seem like a big difference, but when dealing with real estate, tenths and even hundredths of percentage points can translate into hundreds or thousands of dollars.) Why the drop? With fewer buyers currently in the market, those purchasing homes have more negotiating power, leading to reduced down payment requirements.

There are more treats than tricks out there for you. Many of our states and communities have down payment programs available to all kinds of buyers. You just need to know where to look, and that’s where a good REALTOR® and loan officer can help. All our fellow real estate professionals are here to ensure your journey home is smooth and easy. Plus, these great partners will be able to discuss all the available loan options for you and the property you want.

Here’s a bonus topic for any current homeowners out there! We know you may have questions about applying the proceeds from your home sale to your new place. This article can help! The bottom line is that even when there are unforeseen obstacles, you can lean on the collective expertise of the real estate professionals involved in your transaction. Thank you for trusting our teams to detangle and demystify your title work and closing process! Reach out to one of our branches anytime.