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Do I Really Need To Put 20% Down on My First House?

“Do you really need 20% down? People still seem to think so,” says Kyle Killebrew. “But I would say three to five percent down is the true average for my clients.” In fact, 6% was the median down payment for first-time home buyers who financed a purchase in 2019, according to a report by the National Association of Realtors.

“You definitely do not need 20% down to buy a home; especially if it’s your first home purchase. It’s the biggest myth out there,” Killebrew adds.

The minimum down payment for a house depends on the type of loan and a lender’s requirements. Here are the minimum down payment requirements for the most common types of loans.

  • Conventional loans, which aren’t guaranteed by the federal government, can have down payments as low as 3% for qualified buyers. Some lenders offer down payment assistance grants to allow even lower down payments.
  • FHA loans, backed by the Federal Housing Administration, require a minimum 3.5% down. FHA loans allow lower minimum credit scores than conventional loans.
  • VA loans for military service members and veterans, and USDA loans for certain rural and suburban buyers, usually require no down payment. VA loans are backed by the U.S. Department of Veterans Affairs, and USDA loans are guaranteed by the U.S. Department of Agriculture.

So how much should a first-time buyer really put down?

There is no single right answer for everyone. Deciding how much to put down on your first house depends on your financial situation, how long you plan on living in the home, and the housing market in your area.

Here are some general tips to saving for your first down payment.

  • Avoid draining your savings account for a down payment. You’ll want to have some money on hand for closing costs, homeowners insurance and property taxes.
  • Budget for things you’ll need to buy after moving in, like a lawn mower for that new lawn, and for home maintenance and repairs.
  • Earn more interest on what you are saving by stashing money in a high-yield savings account.

“Just remember, homeownership is much more attainable than you might think. It’s important to really do your research and place your trust in the right people to help you along the way,” says Killebrew.

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