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