Saving for a Down Payment? Here’s What You Need to Know
Are you considering buying your first Kansas City home? When focusing on saving for all the costs of such a significant purchase, one of the expenses at the top of your list is often your down payment. Many Kansas City homebuyers are intimidated by how much they need to save, but this is often due to the misconception that an interested buyer must put 20% down. However, this belief isn't always the case. As the National Association of Realtors (NAR) notes:
"One of the biggest misconceptions among housing consumers is what the typical down payment is and what amount is needed to enter homeownership."
A recent Freddie Mac survey finds:
". . . nearly a third of prospective homebuyers think they need a down payment of 20% or more to buy a home. This myth remains one of the largest perceived barriers to achieving homeownership."
Here's the good news: Unless specified by your loan type or KC lender, it's typically optional to put 20% down. You could be closer to your dream of homeownership than you realize!
According to NAR, the median down payment hasn't been over 20% since 2005. The median down payment for all homebuyers in the Kansas City housing market is only 14%. It's even lower still for first-time homebuyers at just 6% (see graph below):
What does this mean for you as a KC homebuyer? You may not need to save as much as you initially thought.
Options That Can Help You Toward Your Homebuying Goal
It's more than just the amount needed for your down payment that needs to be clarified. There are also numerous misunderstandings about down payment assistance programs. For starters, many people believe assistance is only available for first-time homebuyers. While first-time buyers have many possibilities to explore, repeat buyers also have options.
According to Down Payment Resource, over 2,000 homebuyer assistance programs exist in the U.S. and most help with down payments. This same article goes on to say:
"You don't have to be a first-time buyer. Over 38% of all programs are for repeat homebuyers who have owned a home in the last 3 years."
Additionally, some loan types, such as FHA, carry down payments as low as 3.5%. Options like VA and USDA loans with no down payment requirements are available for qualified applicants.
Are you interested in learning more about down payment assistance programs? Sites like Down Payment Resource hold invaluable information. More importantly, partnering with a trusted Kansas City lender and a Just Say Home Team real estate expert will help you know what you qualify for on your homebuying journey.
A 20% down payment isn't always required when looking to purchase a Kansas City home. Are you looking to buy a home this year? Start the conversation with the Just Say Home Team about your homebuying goals to make this dream a reality!