Myth 2: I Need To Have a 20% Down Payment
As you set out on your homebuying journey, you're likely working on saving for your purchase. But do you actually need to save 20% for your down payment?
A Common and Costly Misconception If you’ve asked anyone for advice on how much to save, chances are at least one them suggested you should save 20% of the purchase price for your down payment. While that’s great if you’re able to do so, saving that much can be especially challenging for first-time buyers. But there's good news. While well-intended, that advice is likely based on a common misconception. The National Association of Realtors (NAR) says: “One of the biggest misconceptions among housing consumers is what the typical down payment is and what amount is needed to enter homeownership . ” The truth is, you may not need to save as much as you think. Unless specified by your loan type or lender, it’s typically not required to put 20% down.
The Benefits of 20% Down While you usually don’t need to put 20% down, doing so can have some great perks, if you’re able. Those may include: 1. Your interest rate may be lower. 2. You’ll end up paying less over the life of your loan. 3. Your offer will stand out. 4. You won’t need Private Mortgage Insurance (PMI).
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