Coming up with a 20% down payment to buy your first home can seem impossible.
"The idea they'll need 20% keeps a lot of people from making the plunge," says Andy Taylor, who runs the mortgage team at Credit Karma. Almost 7 in 10 renters point to saving up for the down payment as the first big obstacle to homeownership, according to a 2018 Urban Institute report.
The good news is, you might not need actually that much money. Most home buyers put down far less—a median 7.6%, according to data provided to Grow by Attom Data Solutions, a national real estate data firm based in Irvine, California. Some mortgages can be had for even less, as little as 3% down. In select cases, you can get away with putting down nothing at all.
So just how much do you need to put down to buy a home? That varies wildly across the country:
How can you figure out how much you, personally, might need for a down payment, and then how do you get there? Start with these three steps:
When Bryan Genter bought his three-bedroom home in Cape Coral, Florida, last year, he was surprised to discover that he needed less than $5,000 to buy the $152,500 home. The 25-year-old ended up qualifying for a low down payment loan requiring a down payment of just 3%.
"I had no clue how much money I would need to set aside for the home," says Genter, who is a co-owner of coffee trike operator Shift Coffee Bar.
The Urban Institute report found that most renters aren't aware of low down payment programs, but they're worth investigating. Check out our explainer here.
One option is a Federal Housing Administration (FHA) issued mortgage, which is a government-backed loan requiring a 3.5% down payment. It's designed for low- and middle-income families and has borrowing limits that vary depending on where you're looking to buy a home. The U.S. Department of Veterans Affairs (VA) and the U.S. Department of Agriculture (USDA) both offer "zero down" loans to qualifying borrowers—active military and veterans, and residents in certain rural communities, respectively.
There's a catch, though: Put down less than 20%, and lenders typically require you pay something called private mortgage insurance (PMI) until you have more than 20% equity in the home. That can cost you an amount equivalent to 0.5% to 1% of the mortgage each year.
How easily you can take advantage of low down payment programs depends on where you want to buy a home. To limit their risk, lenders cap how much home buyers can borrow under those programs. In most areas, the FHA-loan limit, for example, is about $315,000, but can be up to $726,500 in high-cost metros. Those caps are worth keeping in mind as you start your house hunt.
Caps can also mean buyers in many of America's most expensive markets are priced out of a low down payment loan—so they might find they do actually have to put down 20%. For example, the typical home price in San Jose, CA, is $1.1 million, according to real-estate listing site Realtor.com. So no surprise that the median down payment in San Jose is 24.7%, or $277,700.
Meanwhile, the typical down payment in the Virginia Beach, Virginia, metropolitan area is 1.9%, or $4,700. This market, which includes Naval Station Norfolk, is flooded with service members and veterans who take advantage of zero down payment VA mortgages.
Places with higher typical down payments tend to be the very parts of the country where fewer folks own their homes. The homeownership rate in San Jose is 52.8%, compared to 66.3% in Virginia Beach.
Don't stop your research with low down payment programs. Some cities and states have down payment assistance programs that will help residents come up with money to buy their first home.
For example, New Jersey offers qualifying first-time buyers a loan of up to $10,000 to cover down payment or closing cost expenses, while the city of New Orleans provides up to $20,000. In both cases, that money doesn't have to be repaid as long as buyers remain in the home for at least five years.
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