I did a very successful open house yesterday, at a price point that was attractive to a lot of first time home buyers, and one of the biggest questions that people were asked was “How much do I need as a down payment?” There’s a common misconception that you can only purchase a home if you put 20% down. Let’s say on a $200,000 home, some folks assume they need to come up with $40,000 and that is just not correct. Check out the 4 most common misconceptions about down payments.
Myth #1: You need a 20% down payment. False. There are some amazing loan programs out there, designed specifically for first time home buyers, and one of them is an FHA loan, where you need as little as a 3.5% down payment. You could also put down 5%, 10%, 15%, you could put down the 20%, which is amazing, or at least in the Austin area, we have a lot of neighborhoods that qualify for a USDA loan, which means you don’t have to put any money down. If you are a Veteran, and you’ve served in the military, a VA Loan another amazing program where you don’t have to put any money down. So the answer is no, you do not need to come up with the 20% down payment in order to purchase a home.
Myth #2: Low down payment programs are only for first time home buyers. This is false. Low down payment, and down payment assistant programs are available to many qualified home buyers, even if you’re buying your second, third, or fifth home. Check with your lender to see if you qualify for any programs.
Myth #3: It’s difficult to qualify for down payment assistance. That is not true. There are several down payment assistant programs available for home buyers with all levels of income, current renters, current homeowners, and buyers with a diversity of credit scores. However, you will never know what you qualify for unless you speak with someone that actually does this for a living, and can guide you and let you know the best route, so speak with a qualified lender.
Myth #4: You can’t use gifts, grants, or loans for your down payment. That is simply false. Completely false. You can get a loan for your down payment. You can get a loan for 15% of your down payment, and put down 5% in cash. You can get cash from your parents, your grandparents, you can be gifted the money. Your lender might have an amazing loan program where they’ll gift you a certain percentage of your down payment. It never hurts to ask. Just make sure that you let your lender know if you’re receiving a gift for your down payment.
So there you have it. The top 4 down payment myths debunked. thanks to the National Association of Realtors for that information. If you have any questions, please reach out. I love answering questions and working with first time home buyers, I’m here for you. I really am. Check out my YouTube channel for more videos on buying & selling real estate.