Time and again, we hear from potential buyers that one of the most challenging parts of buying a home is saving up for the down payment.
Many people believe that they need a 20% down payment in order to buy a home, but that’s not really true. While 20% is a standard, it is by no means the only option for putting down a deposit on a home.
In fact, there are a wide variety of mortgage loans out there that may only require as little as a 3% down payment. If you’re still saving up for your home’s down payment, here are a few things to keep in mind about your buying timeline.
How Long Does it Take to Save up a 20% Down Payment?
This depends largely on your financial circumstances. How much you make in a year, your current debt and monthly expenses, and your saving patterns will largely dictate how much (and how quickly) you’ll be able to save.
Many financial advisors suggest saving around 20% of your monthly income throughout the year, and this is certainly a great place to start! However, if you want to buy a home as soon as possible, you may have to be a more aggressive saver.
It also depends on what state you live in. In fact, the number of years it takes a median-income earner to save up for a 20% down payment differs largely by state.
How Long Does it Take Buyers in North Carolina?
In North Carolina, it generally takes someone around two years to save up enough money for a down payment. In other states, depending on median housing prices, this may be as high as 30 years, or as low as a little over one.
But that’s just for the 20% down payment option. If you’re eligible for a 3% down payment program, it may only take you about half a year to save up for a down payment.
All in all, it depends largely on your financial situation!
How Much Should I Spend on Housing in a Month?
The age-old rule for handling your income is the 50/30/20 rule. Half of your monthly income should go to necessities like housing, healthcare, and food. 30% should go towards discretionary spending, and 20% should go to savings.
Experts in real estate agree that of that 50%, no more than 30% of your income should go towards your housing expenses.
How Do I Navigate the Financial Side of Buying a Home?
We can help with that. Here at Linda Craft & Team REALTORS®, we have years of experience helping home buyers from a wide variety of backgrounds find success in the greater Raleigh real estate market. Not only can we walk you through your many options as a buyer, but we can also connect you with professional lenders in the area.