How Much Do First-Time Homebuyers Put Down? And Where Do They Get The Money?
Buying your first home is an exciting journey with learning curves and a huge feeling of accomplishment. This article aims to clear up common misconceptions about down payments and how your family background might impact your homebuying process.
Busting the 20% Down Payment Myth
Many first-time buyers believe they need to save up 20% of their future home’s purchase price for a down payment. This idea can make the dream of owning a home feel just out of reach. The truth is, the median down payment for all buyers is now around 15%, and it drops to just 8% for first-time buyers. That’s the median for all first-time homebuyers according to a National Association of Realtors study, meaning that many first-time buyers put even less down.
First-Time Homebuyer Down Payment Resources
Don’t let the down payment hurdle discourage you. There are over 2,000 homebuyer assistance programs in the U.S. aimed at helping with down payments! Plus, loan options like FHA loans require as little as 3.5% down. For those eligible, VA and USDA loans can even offer a path to homeownership with no down payment required. A quick chat or call with our team will help us narrow down the local grants and programs tailored to you. Now that you know you don’t have to put 20% down as a first-time buyer, let’s talk about how people are affording their actual down payments.
How Your Family Affects Your Homebuying Journey
“If your parents are homeowners, you’re more likely to be a homeowner.” This statement by Susan M. Wachter, a professor of real estate and finance at the University of Pennsylvania highlights a simple truth: having homeowner parents often means more than just emotional support. Why? They might help with the down payment by using some of the equity they’ve built up in their own home. In 2023, around 23% of first-time homebuyers received a down payment gift from family.
Your parents may share invaluable advice on navigating the homebuying process since they’ve been through it all before. They may also allow you to live at home longer, giving you a chance to build up your savings rather than paying rent. In fact, nearly a third of Gen Zers live at home. It’s okay if your path to homeownership takes longer or looks different from others around you!
First-Time Buyer Challenges Without Family Support
For those without the advantage of homeowner parents, you can still have your own place to call home! As home prices rise, so do down payment requirements, making it tougher for first-time buyers to enter the market. Yet, it’s not an insurmountable challenge. Seeking out assistance programs and exploring alternative financing options can provide a pathway to homeownership, even without family support. Colorado has great options which can drastically decrease your down payment requirement and get you into your home, building your own equity, faster.
Wrapping It Up
The path to buying your first home is unique for everyone, influenced by personal circumstances, financial readiness, and family background. Understanding the true requirements for down payments and recognizing the potential advantages of family support can make the process more manageable and less intimidating. Remember, with the right information and resources, the dream of homeownership is within your grasp. Together, we’ll help you take it step by step, no matter what your homebuying journey looks like. Take the first step by seeing what programs you qualify for!
