How much do you really need to put down to buy a house? The majority of people falsely think you need a lot more than you really do.
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How much money do you need for a down payment when buying a home?
A recent article in the USA Today reported that 69% of consumers are afraid of not having enough cash for a down payment to buy a house. It's the same reason many people don't move from their apartment or rental home. The Aspiring Home Buyers Profile recently addressed this issue too, finding that 39% of consumers think they need at least 20% down to buy a house. Another 26% think you need at least 15% down.
You don't need that much, though, because you can get financing for as little as 3% down. If you qualify for a VA or USDA loan, you can buy a home for 0% down, but many consumers aren't aware.
The Aspiring Home Buyers Profile also proposed the same question in a survey to homeowners. How much of a down payment do they think is needed? You might be surprised to hear, but 30% of current homeowners think you need 20% down to buy a home. Another 35% believe you need at least 15% to 20% down.
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More than half of all homeowners think you need at least 15% down to buy a home.
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If you've wondered why you haven't seen many 'for sale' signs in your neighborhood or why housing inventory is so low, it's simple. Many current homeowners don't know that they can move up and make the jump to their dream home without that 20% down payment. The same study found that the median down payment for first-time homebuyers was only 6% for three straight years. The median down payment for repeat buyers in that same time period was 14%.
Non-homeowners and homeowners alike thinking they do more than they actually need for a down payment is holding back listing inventory in southeastern Michigan. Last year at this time we had more than 27,000 homes on the market, and currently, we're down to 16,000. That's a 39% drop inventory, so if you're thinking about selling your house, now is a great time.
If you have any other questions about down payments or you're thinking about selling your house, give me a call or send me an email. I'd be glad to help.
