Let’s Clear Up the Confusion Around Down Payments

By Gardner Realtors | October 30, 2019

Whether you’re a seasoned real estate investor, or you’re preparing to jump into the home buying market for the first time, there are always a lot of questions, and perhaps confusion, about what is truly required for a down payment. There are also countless advertisements consistently telling you how their company/service can give you down payment assistance. These are important questions with very important answers, and we’ll answer both today.


Down Payments


1. How much do you really need for a down payment?

There is a long-standing misconception about down payment requirements. A survey from Fannie Mae shows only 17% of consumers know the minimum options are actually between 1 – 5% of the purchase price, and 40% don’t know how much they need at all.

There are many mortgage loans available that require as little as 3% down for first-time buyers. The FHA offers mortgages that require just 3.5% down, and first-time buyers use that a lot. There are even loans available for Veterans that provide 0% down payment options too.

It is a well-circulated myth that you need to put a 20% down payment to buy, but as I said, that’s not necessarily true. Even more good news, here in Louisiana and Mississippi, it’s easier to save the actual necessary amounts compared to the rest of the country. By determining the percentage of income spent renting here locally, and the amount needed for a down payment, this handy information shows you how you can save for a 3% or 10% down payment. This puts homeownership within a much closer reach for many potential buyers.



2. How can I get help with my down payment?

Regardless of the loans available, many buyers still need assistance with a down payment. The great news is, there are a lot of ways to tap into down payment assistance options. Here are just a couple of them:

Assistance from Family Members

The National Association of Realtors (NAR) reports, “a third of recent first-time buyers received down payment assistance from family members.” They also mentioned, “the average net worth of those aged 75 and over stands at $264,800…They just might offer the boost the next generation needs to become homeowners.

That means one way to find help with a down payment is to accept a gift from a family member. If this is an option for you, make sure you talk to your loan officer before accepting the money to ensure  you document the process the way your loan requires. This way, it will be received properly, and you can still potentially qualify.

Down Payment Assistance Programs

The reality is, not everyone has a loved one or a family member who can provide help with a down payment. There are, however, more than 2,500 down payment assistance programs available (by local areas like city, county, or neighborhood), and some of them are even specifically for first-time buyers.

According to the survey above, “only 23% of consumers are familiar with low down payment programs.”

That’s why it is so important to get familiar with these options by doing your homework before you plan to buy a home. Determine what is available in the area where you ultimately want to live so you have all the details you need to take advantage of the down payment assistance option that is best for your family.


Down Payment Statistics


We can help

As the “#1 Fastest-Growing Mortgage Bank” in North America, our local partner, Movement Mortgage, has earned a reputation for putting customers first no matter how large or small a loan you’re looking for. Their dedicated team of mortgage professionals will provide you with the most personalized and streamlined mortgage experience in the industry. Additionally, they can provide and service beyond the real estate purchase, such as reverse mortgages, refinancing, and FHA 203K renovation loans.



If buying a home is one of your long-term goals, you may be able to get there sooner than you think by tapping into one of the many down payment assistance programs available. Ready to dive in? Check out our user-friendly mortgage calculator!


*This article was adapted from Keeping Current Matters.


Contact a Gardner Realtor to get started on creating the life you love!



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