In a Zillow report (below), research revealed that coming up with a down payment is the number one hurdle for home buyers.
I have found that it’s a common misconception among potential buyers, that you must have a 20% down payment to buy a home. I’m here today to let you know that is CATEGORICALLY UNTRUE! In fact, a good many of the home buyers I work with have nowhere near that.
With a requirement of only 3.5% down…
…the most common loan among first-time home buyers is the FHA mortgage. Be that as it may, FHA is not just for real estate newcomers. Anyone who intends to occupy the home may be eligible for FHA financing. There are maximum loan limits. Here in Maricopa County (AZ) for example, a top end mortgage cap of $294,515 would apply for 2018. Note: that is the loan limit not the home price. Lending limits will vary by county based on housing types and average home prices.
Many of my clients are Active Military or Veterans using a VA loan. VA allows 0% down and by using a program like Heroes Home Advantage, even your closing costs are minimal. We have been known to close a VA home with zero out-of-pocket funds from the buyer.
Heroes Home Advantage helps with closing costs for Police and
Firefighters, Nurses and other Medical Professionals, Teachers,
Emergency Responders, Veterans and Military Members.
Home Seller or Buyer, no cost to register and no obligation.
There are also down-payment assistance options available throughout the country. Most require limited out-of-pocket expense along with reasonable terms including the possibility of no repayment of the assistance money.
Last but not least, DID YOU KNOW that you are allowed to have down payment and/or closing costs gifted to you (but not loaned) by a relative or friend? There are of course guidelines but worth checking into if you know someone willing to help you get into a home of your own.
Zillow: The No. 1 Obstacle for Would-Be Homeowners.
Considering all the hurdles to homeownership, one seems consistently more insurmountable than the others: the down payment.
Renters are having trouble stacking up the savings to place a down payment on a home, according to the recently released Zillow® Housing Aspirations Report (ZHAR). Seventy percent of renters surveyed in the report say the down payment is more of a hindrance than debt (cited by 50 percent of those surveyed), job security (38.5 percent) and qualifying for a mortgage (53.2 percent)—though those aspects are barriers, as well. Low supply was a roadblock for just 11.2 percent of those surveyed.
“With home values close to record highs, it’s no surprise renters are concerned about coming up with enough money to buy a home,” says Dr. Svenja Gudell, chief economist at Zillow. “Rising rents are also a factor—it’s extremely difficult to save when you’re paying record-high rents.”
The irony? The difficulty of coming up with a down payment is keeping most renters from saving money as a homeowner. In 33 of the 35 major metropolitan areas, a monthly mortgage is less expensive than monthly rent.
Though renters have low down payment options, the long-term savings gained with 20 percent down—a general standard—often outweigh those earned upfront.
“While it is possible to put down as little as 3 percent on a home, the trade-off is a higher interest rate and costly private mortgage insurance—a financial trade-off that may make sense for some buyers,” Gudell says.
Renters, still, have not lost sight of their homeownership goals. Sixty-three percent of those surveyed are “confident” in their ability to afford a home “someday;” 25 percent have a more definitive timeline, planning to buy a home in the next three to five years. Twenty-two percent of millennial renters, markedly, plan to buy a home in the next one to two years. Only 2 percent of millennial renters plan on never buying a home.
Importantly, 66 percent of those surveyed equate owning a home with the American Dream.
For more information, please visit www.zillow.com. Reprinted with permission from RISMedia. ©2017. All rights reserved.
Ever wonder what Closing Costs you’ll be responsible for when you buy or sell a home? Check out our infographic and article:
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What is standard and legal procedure in a Real Estate transaction?
Home Purchase Offers and Agreements 101
Additional Helpful Information for Home Buyers
Getting Pre-Approved for a Mortgage
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Help for Home Sellers
