A recent report released by Down Payment Resource shows that 65% of first-time homebuyers purchased their homes with a down payment of 6% or less in the month of January.
The trend continued through all buyers with a mortgage, as 62% made a down payment of less than 20%, which is consistent with findings from December.
An article by DS News points to the new wave of millennial homebuyers:
“It seems that the long-awaited influx of millennial home buyers is beginning. Ellie Mae reported that mortgages to millennial borrowers for new home purchases continued their ascent in January, accounting for 84 percent of closed loans.”
Among millennials who purchased homes in January, FHA loans remained popular, making up 35% of all loans closed. Ellie Mae’s Executive Vice President of Corporate Strategy Joe Tyrrell gave some insight into why:
“It is not surprising to see Millennial borrowers leverage FHA loans because they typically offer lower down payments and lower average FICO score requirements than conventional loans. Across the board, we’re continuing to see strong interest in homeownership from this younger generation.”
If you are one of the many millennials who is debating a home purchase this year, let’s get together to help you understand your options and set you on the path to preapproval.
A Home Buyer’s Guide to Saving for a Down Payment
According to builder.com, first time home buyers in the United States take nearly eight years to save for a down payment for their dream home. The time frame is derived by factoring in the amount a renter pays for housing in each state and the required 10% down payment. Under this approach, buyers in South Dakota state take around 3.5 years to save for a down payment, which is the shortest compared to other states. Homes for Sale in Naperville
Another study by Realty Trac shows that it takes an average of 12.5 years for a new buyer in the United State to save for a 20% down payment. The study is based on a personal saving rate of 5.6% and the current home median home prices. Given that most first time home buyers are young adults with earnings below the national median salary, they would have to wait until they are 42 to afford a home. Homes for Sale in Naperville
Top Tips To Save For A Down Payment
Being a renter does have some advantages. No paying off the mortgage, no property taxes, and the landlord takes care of any maintenance and repair costs. However, renting your home does have one major drawback: You are spending money on rent without gaining any equity of the property. Homes for Sale in Naperville
Many renters want to own their home, but struggle to find the cash needed to make a down payment on a property. Homes for Sale in Naperville
In fact, a recent survey conducted by the website gobankingrates.com showed that a fifth of adults in the U.S. don’t use a savings account, while a third of those that do have zero funds in their account. Homes for Sale in Naperville
Below you will find some top tips to help you start saving and put aside enough funds to put a down payment on a home.