Istock You may not need as much cash as you think. In the following decades, many government-backed mortgages mandated a 20% down payment.
That’s a daunting figure at today’s prices. Applying the 20% rule would mean you’d need $80,000. More from Your Money :
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But in reality, “the typical first-time buyer has a down payment well under 20%,” said Jessica Lautz, deputy chief economist and vice president of research at the National Association of Realtors.
More often, Lautz said, people come up with just 6% or 7% as a down payment on their first home. During the first quarter of 2023, the typical down payment on a single-family home represented 7.5% of the median price, according to ATTOM, a real estate data company.
Some mortgages require little to no money down
The federal government, states, banks and credit unions all offer programs with less daunting down payment requirements than the 20% figure, experts say.
Some federal government-supported programs allow you to buy a house with no down payment, or a very low one. The U.S. Department of Agriculture, the Federal Housing Administration and Department of Veterans Affairs, among others, have programs with low down payments.
Financial intuitions, meanwhile, also provide lower options. U.S. Bank offers a downpayment as low as 3%. According to Freddie Mac, this can cost between $30 and $70 per month for every $100,000 borrowed. That typically costs between $30 and $70 per month for every $100,000 borrowed, according to Freddie Mac.
Homebuyer grants help cover some costs
Even as home prices and interest rates have risen, “homeownership is still the best option for building equity long-term,” said Daniel Brennan, director of MaineHousing.
Some states, cities and other groups have programs that award grants to homebuyers that bolster their down payment or help cover closing costs.
The Maine housing authority’s First Home program provides eligible homebuyers with grants of between $5,000 and $10,000 for down payment and closing costs. DC Open Doors, in Washington, D.C., also offers down payment help. And HomeFirst is a program in New York that provides eligible residents with as much as $100,000 toward their down payment or closing expenses.
“First-time homebuyers should know there are resources available,” said Wendi Redfern, senior vice president of single-family programs at DC Housing Finance Agency.
People can visit Hud.gov to find state and local down payment assistance programs in their area, Lautz said. Down Payment Resource also provides borrowers with options.