2022 Boise Idaho Real Estate Blog

How much money do I need for a down payment?

Main Treasure Valley Life

The rule of thumb for buying a house is to have a 20% down payment. But when you are talking about home prices that are hundreds of thousands of dollars, that seems like a large number? Is 20% really necessary? We explain how you may only need 3%.

According to the 2020 Millennial Home Buyer Report, millennials and first-time homebuyers in general have the same goals of home ownership as the previous generations, but with rising home prices around the country, that seems like a hard goal to achieve.

The report says “According to our 2020 survey, saving for a down payment is the biggest barrier for 50% of millennials.” How much to save for a down payment is one of the two biggest myths of buying a home. The other is how High your credit score should be. Build Idaho breaks that down in this article.

Say for example that a home is listed for $210,000. A 20% down payment is $42,000. According to the report, “only about 30% of the millennials in our survey have enough in savings to cover that.” On top of that, there are closing costs and the inevitable costs associated with moving in general.

Breakdown: What is the full cost of buying a home?

If this seems discouraging, there is good news. There are many assistance programs out there that are designed to help potential home buyers get approved for loans for much less than a 20% down payment. Here are some programs available to home buyers who qualify.

FHA loan: A good loan program for buyers with weaker credit. Borrowers can get loans for as little as 3.5% down.

VA loan: No down payment loans for borrowers with a military connection. Contact a VA lender for more information

Fannie Mae and Freddie Mac: Conventional loans with just 3% down.

State first-time home buyer program: Assistance specifically for residents. Search for your state’s program to learn more. Here is a link to information about Idaho’s down payment assistance program. NerdWallet created a list of some of the top Idaho Housing and Finance Association lenders.

Good Neighbor Next Door: Federal program that gives home price discounts for first responders and educators. Learn more here.

Posted by AndrewS at 5/29/2020 12:49:00 AM

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