Everything You Need to Know About Saving For a Down Payment…

By HOM Editor

Fast Fact: Saving for a down payment is the number one obstacle preventing First-time home buyers from achieving the dream of homeownership.

Saving is easy when your income exceeds your spending. But rising costs — particularly rent — along with high student debt and stagnant wages have made saving increasingly difficult. In fact, after correcting for inflation, the average American takes home almost 10% less today than 15 years ago.

That’s why only about 30% of today’s home buyers are first-timers, even though about 40% historically should be.

And it’s a problem that’s bound to grow. Last year, less than 6% of all new homes were priced under $150,000. Almost none were priced under $100,000! Yet 31% of first-time buyers expect to pay less than $150,000 for a home, and another 15% expect to pay under $100,000.

Why’s It Such a Big Deal if Young Americans Can’t Buy?

When first-timers can’t afford to buy homes, sellers hoping to move up are essentially stuck, creating a domino effect throughout a community’s entire housing market.

The good news is that more than 2,000 government programs are available to help first-time home buyers achieve the dream of ownership in a variety of ways:

  •  Home buyer, credit, financial literacy classes and counseling;
  •  Below market interest rate loans;
  •  Grants repaid upon sale or refinancing;
  •  Low-cost mortgages;
  •  Mortgage payment deferral;
  •  Principal forgiveness;
  •  Lower mortgage insurance requirements;
  •  Shared-equity arrangements;
  •  Closing cost assistance;
  •  Down payment assistance;
  •  Mortgage interest credit income tax certificates.

If someone you love is a first-time home buyer struggling to save a down payment, let them know a local REALTOR® can help them navigate state and local programs in an effort to get a down payment and financing.

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