Is the idea of saving for a down payment holding you back from buying a home right now? You may be eager to take advantage of today’s low mortgage rates, but the thought of providing a large down payment might make you want to pump the brakes. Today, there’s still a common myth that you need to come up with 20% of the total sale price for your down payment. This means people who could buy a home may be putting their plans on hold because they don’t have that much in the bank yet. The reality is – whether it’s your first home or you’ve purchased one before – you most likely don’t need a 20% down payment. Here’s why. According to Freddie Mac:
“The most damaging down payment myth—since it stops the homebuying process before it can start—is the belief that 20% is necessary.”If saving that much money sounds daunting, potential homebuyers might give up on the dream of homeownership before they even begin – but they don’t have to. The 2020 Profile of Home Buyers and Sellers from the National Association of Realtors (NAR) notes how the median down payment hasn’t been over 20% since 2005, and even then, that was only for repeat buyers, not first-time homebuyers. As the image below shows, today’s median down payment is clearly less than 20%.