You Don’t Need 20 Percent Down to Buy Your Next Home. Here’s why.
A down payment is simply the amount of cash you are putting towards the purchase of your home. For a $200,000 home, 20 percent down would be $40,000. No small amount.
Despite what you may have heard, a 20 percent down payment on a home is not necessary. Here’s why.
The 20 Percent Down Myth: Then and Now
The myth of the 20 percent down requirement has been circulating since the housing crisis over 10 years ago. Access to credit tightened, especially for median-income homebuyers. Even responsible buyers who had the income to buy, but lacked a large down payment, faced the same challenges. Thankfully, the landscape has improved.
Low down payment options have been around for a long time. In fact, data shows that low down payment loans with sound underwriting are just as successful as loans with large down payments.
However, putting down 20 percent isn’t necessarily a bad thing. It may be the right choice for you if you have the savings as well as investments in other assets. It gives you 20 percent equity in your home and helps you avoid paying a monthly fee for private mortgage insurance.
Sidelined Buyers Watch Housing Costs Rise
At the same time, saving for 20 percent is keeping many buyers on the sidelines. keep reading
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