How Much of a Down Payment Do You Really Need?

A recent survey by Zelman & Associates revealed that 38% of those between the ages of 25-29 years old and 42% of those between the ages of 30-34 years old believe that a minimum of 15% is required as a down payment to purchase a home. A recent questionnaire administered by Freddie Mac showed that over 50% of all respondents thought 20% was required as a down payment.

In actually, a purchaser may be able to put down far less.

Freddie Mac, in a recent blog post addressing the issue, confirmed that there is misinformation regarding the amount necessary when determining the down payment for a home purchase:

“Did you know 40 percent of today’s homebuyers using mortgage financing are making down payments that are less than 10 percent? And how about this: since 2010, the number of people putting down less than 10 percent for conventional loans has grown three fold.  So, not only are low down payment options real, they represent a significant portion of today’s purchases.”

In a separate Executive Perspectives, Christina Boyle, Freddie Mac’s VP and Head of Single-Family Sales & Relationship Management explained further:

  • A person “can get a conforming, conventional mortgage with a down payment of as little as 5 percent (sometimes with as little as 3 percent coming out of their own pockets)”.
  • Qualified borrowers can further reduce the down payment coming out of their own pockets to 3 percent by lining up gifts from family or grants or loans from non-profits or public agencies.

Ms. Boyle goes on to explain:

“Letting more consumers know how down payments are determined could bring more qualified borrowers off the sidelines. Depending on their credit history and other factors, many borrowers can expect to make a down payment of about 5 or 10 percent.”

The bottom line is, if you are saving for either your first home or that perfect move-up dream house, make sure you know all your options. There are programs the lenders I work with have available that not only offer a great rate, but low down payments that can even translate to lower monthly payments. You may be pleasantly surprised.

Advertisements

About Joshua Stein

They say that owning your own home is a major part of living "The American Dream." I'm proud to be an active part in making that dream a realty for the good people of the Delaware Valley as a Realtor® with Coldwell Banker Preferred's Conshohocken office. I am actively involved with the Brotherhood of Congregation Beth Or as well as a proud parent in the Greene Street Friends School community. I also served as Den Leader for my son's cub scout pack as well as a member of the Cub Pack 173 Committee in Flourtown, and now with Boy Scout Troop 665. Professionally, I also hold membership in the Montgomery County, Pennsylvania, and National Association of Realtors®. Whether you or someone you know and love are buying or selling your home, I look forward to servicing all of your real estate needs on the Main Line and beyond.

Posted on July 16, 2014, in Real Estate. Bookmark the permalink. Leave a comment.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: