The Down Payment Assistance You Didn’t Know About

The Down Payment Assistance You Didn’t Know About

Believe it or not, nearly 80% of first-time homebuyers qualify for down payment assistance, yet only 13% actually take advantage of it. If you’re looking to buy a home, closing this gap is crucial—quickly (see graph below):

Here’s what you need to know to make the most of your down payment in today’s housing market.

Amplify Your Down Payment Potential

For first-time buyers, the key to down payments is to take full advantage of the resources available to help you. Many options can help you reach your goal faster than you might think.

For instance, there are loan programs that require as little as 3% down, or even 0% for qualified borrowers, such as Veterans. Additionally, there are down payment assistance programs, like grants, that can help cover your upfront costs.

If you’re interested in exploring these options and how they might benefit you, connect with a trusted lender. Not checking what’s available could mean leaving money on the table and missing your opportunity to buy a home. These resources can enhance your down payment, which may lower your future monthly mortgage payments and reduce or eliminate fees like private mortgage insurance.

Don’t Let News Headlines About Down Payments Scare You

There’s one more point to consider. News coverage has highlighted that the typical down payment is on the rise. A report from Redfin states:

“The typical down payment for U.S. homebuyers hit a record high of $67,500 in June, up 14.8% from $58,788 a year earlier . . . This was the 12th consecutive month the median down payment rose year over year.”

But don’t let those high figures intimidate you. Just because the average down payment is increasing doesn’t mean that down payment requirements are also rising. It’s important to understand this distinction. Many buyers are choosing to put more down to counteract higher mortgage rates, and current homeowners are leveraging their equity to boost their down payment on their next home. As HousingWire explains:

“. . . buyers are putting down a higher percentage of the purchase price to lower their monthly mortgage payment. And buyers also had more equity from their home sales, which gives them more cushion.”

Let’s break those two reasons down a bit:

1. A bigger down payment helps lower your monthly mortgage payment. Affordability has posed a challenge for many buyers lately, which is why those who can make a larger down payment are opting to do so to help reduce their future housing costs.

2. Buyers who already own a home have a record amount of equity to leverage. Someone who purchased a home a few years ago has likely seen a significant increase in their property's value due to home price appreciation. As a result, these homeowners can make a much larger down payment compared to the average first-time buyer who hasn't owned a home yet.

Bottom Line

What’s the best course of action? Speak with a trusted lender about your options. They can help you understand your current situation and how to access the resources you may qualify for. Assistance is available; you just need to collaborate with a professional to make the most of it.