The Misconception That Is Delaying Homeownership for More Buyers Than Any Other

Have you heard that you need twenty percent down to purchase a home? It is one of the most common beliefs Melanie Bundy encounters and while putting twenty percent down does make sense for some buyers it is certainly not required for everyone. The conversation that follows almost always reveals that the buyer is significantly closer to homeownership than they assumed.

What the Twenty Percent Myth Actually Costs Buyers

When a buyer believes they need twenty percent down on a three hundred thousand dollar home they set a sixty thousand dollar savings target before they even consider having a mortgage conversation. That target can represent years of additional renting while equity accumulates for someone else and while home prices potentially continue moving higher.

The target is also simply not accurate for most loan programs available today.

What the Options Actually Look Like

There are several loan programs with meaningfully lower down payment requirements than twenty percent. FHA loans require as little as 3.5 percent down for qualifying borrowers. Some conventional programs allow as little as 3 percent for eligible first-time buyers. VA loans for veterans require zero down payment. USDA loans for qualifying rural and suburban properties also offer zero down options.

Down payment assistance programs add another layer of possibility. State, county, and municipal programs exist specifically to help buyers who are close to qualifying but need help with the upfront cash requirement. Grants and forgivable loans are available in many markets and a significant number of buyers who would qualify have never checked because they assumed twenty percent was the only path.

Seller-paid closing costs can also reduce the amount of money needed upfront. In markets where homes are sitting longer sellers are increasingly willing to contribute toward closing costs as part of the negotiation. That contribution can make the total cash required at closing dramatically more manageable than it might otherwise appear.

Why the Conversation Needs to Happen Before the Assumption

Every buyer's situation is different and the right combination of loan program, down payment assistance, and negotiating strategy looks different from one person to the next. The only way to know what options are actually available is to have the conversation rather than operating on assumptions built around a number that does not reflect today's lending landscape.

As Melanie Bundy explains the first step is not saving forever toward a target that may be far larger than necessary. It is having a conversation and creating a plan that makes sense for your specific situation right now.

You may be closer to homeownership than you think. Reach out to Melanie Bundy to find out what the real path looks like for you.

Sources

ConsumerFinancialProtectionBureau.gov
HUD.gov
FannieMae.com
MortgageNewsDaily.com
Investopedia.com