True or false: if you’re buying a home, you need to have at least a 20% down payment? If you answered true, you aren’t alone—so did 62% of Americans.
But in reality, that couldn’t be further from the truth—and you don’t have put off your home-buying dreams just because you can’t come up with 20% down!
While a 20% down payment will help you avoid private mortgage insurance (PMI), it isn’t some sort of home-buying hurdle that you must clear in order to buy. In fact, it’s far from the most common amount that U.S. buyers put down!
Here’s the truth about down payments—and why you shouldn’t let that 20% number prevent you from reaching your buying goals.
The Truth about Down Payments
According to NerdWallet’s 2019 Home Buyer Report, around 6 in 10 Americans think you need a 20% down payment in order to buy a house. Because of this, they also tend to think that it takes several years to come up with the necessary funds for buying.
Unfortunately, this way of thinking unnecessarily postpones plenty of people’s home-buying dreams!
The truth? The most common down payment amount—put forward by around 32% of buyers—was just 5% or less. Put that in terms of concrete amounts, and it translates to just $7,500 on a $150,000 home or $15,000 on a $300,000 home.
Other Common Down Payment Amounts
While 5% or less is the most common down payment amount, it’s still just one of the many options that buyers choose. Here’s how the rest of the numbers break down:
- 16% of buyers put down 6 – 10%
- 23% of buyers put down 11 – 20%
- 18% of buyers put down more than 20%
- 10% of buyers bought their home outright
A 20% down payment is a great goal, but you don’t have to feel locked into that amount! Instead, consider how much money you’d feel comfortable with putting down, then work from there.
Buyers are Optimistic
Despite prevailing misconceptions about down payments, buyers are still feeling optimistic about the market. Around 42% of Americans feel better about their home-buying prospects this year, which is up almost 20% from last year.
Additionally, 44% of people say that the current economic and political conditions make them more likely to buy in the next year, which is around a 10% increase from last year.
Long story short? Now’s a great time to buy!
Find Your Dream Triangle Home
Buying a home is major step, so it’s important that you have trusted and experienced professionals on your side. At Linda Craft & Team REALTORS®, we have over 300 years of combined real estate experience, making us well-equipped to provide you with everything you need to find home-buying success.
Take some time to explore our resources for home-buyers, learn a little more about what our past clients have to say, and use our specialized search tool to narrow down your options. Once you’re ready to get started, we’d love to talk details!