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You don’t actually need 20% down to buy a house

July 29, 2021 | 2 Minute read

We don’t need to tell you that real estate has changed a lot over the years. This isn’t your parent’s housing market anymore — and some homebuying best practices we’ve been told for decades just don’t hold up anymore.

For example, your down payment. Even though the majority of consumers continue to believe they need at least 20% down to buy a home, National Association of REALTORS® data shows the average down payment is just 12%. In fact, buyers aged 22-30 are only putting down 6%.

Median Down Payment by Age

The amount of your particular down payment will be impacted by a number of factors, including the lender you use, your credit score and history, and the type of loan. For example:

FHA loans are backed by the Federal Housing Administration and require as little as 3.5% down with a credit score of 580 or higher. With a score under 579, the minimum is typically 10% down.

VA loans, guaranteed by the U.S. Department of Veterans Affairs, typically do not require down payments for current or veteran military service members and their surviving spouses.

USDA loans are backed by the U.S. Department of Agriculture’s Rural Development Program and require no down payment either if the property falls within an approved area.

Of course, a low down payment can help shorten your path to homeownership, but making a larger down payment still has its advantages, which include:

  • a better interest rate
  • lower monthly payment
  • more equity in your home from the beginning
  • potentially avoiding private mortgage insurance

We’re here to make home buying and selling simple, affordable, and stress-free. Start your online loan application and lock in a low rate in minutes.

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As you gather with your friends and family to celebrate the Olympics this week, remember… you don’t have to bring all your gold to the closing table when buying a new home. With rates at an all-time low and with average down payments at just 12%, there’s never been a better time to realize your dream of homeownership. 

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No matter where you’re headed, we’re here to help unlock the right solution for your homeownership needs. Submit the form and we’ll be in touch to discuss your needs.

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