Home News Here’s the Average Down Payment on a House in 2022

Here’s the Average Down Payment on a House in 2022

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Buy a house It could be one of the biggest purchases many Americans make in their lifetime. However, as housing costs rise, many find it increasingly difficult to save enough for a 20% benchmark down payment.

Thankfully, there are still many ways to buy the home you want without having to pay a lot of money in advance. There’s a wave of homebuyers buying homes in cash or with a large down payment, but many Americans are upfronting much less than the usual 20% of home prices, even in this tough home market. I understand this.

under, select Learn more about what an average down payment for a home these days is, how you can determine if you have enough money to pay the down payment, and the best way to save it.

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Average down payment for today’s house

according to Recent Report by National Association of Real Estate AgentsAlmost half of consumers think they have to pay at least 16% of the value of their home for a down payment, but one in ten think they have to pay more than 20%.

Fortunately, that’s not the case. According to the report, the average down payment for homes in 2021 was only 7% for first-time homebuyers and 17% for repeaters.

Among the many difficulties for potential homebuyers is the fact that they have had to compete with cash buyers for the past two years. The National Real Estate Agents Association In May 2022, 25% of buyers said they had enough cash on hand to buy a home without the need for funds.

However, because the buying market slowed down significantly Rising interest ratesIn general, homebuyers are getting better shots in landing their dream home, regardless of the amount of down payment.

I bought a house in January 2022 with a regular loan and a 5% down payment. After paying a down payment of less than 20%, I did not experience any pushback.You can continue by putting a small amount Repay other debt When Invest for the future..That said, I’m still eligible for payment Private mortgage insurance, Or PMI. It will eventually be out of the mortgage when it reaches the 20% equity mark.

Look at and select The best lender for those who want to buy a home with a small down payment Ranked Chase Bank As the best choice for flexible payment options Ally Bank As the best without lender fees, and CitiMortgage Great if you don’t have a PMI.

Chase Bank

  • Annual rate (APR)

    Apply for personalized rates online.Includes fixed and floating rate mortgages

  • Loan type

    Traditional loan, FHA loan, VA loan, DreamMaker℠ loan, jumbo loan

  • Clause

  • Credit required

  • Minimum down payment

    3% when moving forward with a DreaMaker℠ loan

Ally Bank

  • Annual rate (APR)

    Apply for personalized rates online.Includes fixed and floating rate mortgages

  • Loan type

    Traditional loan, Home Ready loan, jumbo loan

  • Clause

  • Credit required

  • Minimum down payment

    3% when moving forward with a Home Ready loan

Strong Points

  • With an Ally HomeReady loan, you can get a slightly lower down payment of 3%.
  • Pre-approved in just 3 minutes
  • Submit application in just 15 minutes
  • Online support available
  • Customers of existing allies can receive discounts applied to closing costs
  • There is no lender fee

Disadvantages

  • We do not offer FHA loans, USDA loans, VA loans, or HELOC
  • Mortgages are not available in Hawaii, Nevada, New Hampshire, or New York.

Citi Mortgage®

  • Annual rate (APR)

    Apply for personalized rates online

  • Loan type

    Traditional loan, FHA loan, VA loan, jumbo loan

  • Clause

  • Credit required

  • Minimum down payment

Strong Points

  • Citi’s Home Run Mortgage program offers a down payment of only 3%.
  • Citi’s Lender Assistance Program provides eligible homebuyers with up to $ 5,000 in credit to spend on closing costs
  • Ability to choose between fixed rate mortgages and floating rate mortgages
  • Citibank new and existing customers may be eligible for a closing cost discount based on their account balance
  • HomeRun Mortgage Program Allows Down Payment Of Less Than 20% Without PMI
  • Provides homeownership education and counseling

Disadvantages

  • No 0% down payment option
  • Existing customers need a high account balance to receive some of the best interest rate discounts

How to tell if you have enough money to buy a house

Regardless of the amount of down payment, there are many other costs associated with owning a home, such as mortgage payments, property taxes, and maintenance costs. Before you make an offer to the house, there are some financial benchmarks that you may want to hit first.

However, an important indicator to keep in mind is that monthly mortgage payments should always be less than 30% of your total monthly income.

For example, if you buy a $ 400,000 home and pay a down payment of $ 20,000, you should plan to secure an additional $ 12,000 to $ 24,000 to cover the closure process. Assuming a 30-year fixed rate mortgage and a 4.5% interest rate, your monthly mortgage payment using PMI would be around $ 2,400. To buy comfortably, you need to earn a total income of $ 8,000 a month.

Unfortunately, many Americans are now aware that their homes are too expensive and their budgets are too low. The term is commonly known as “poor home” and Consumer issues A staggering 69% of homeowners say they feel this way.

The best way to avoid this is to run the number before you buy and make sure you meet the above criteria to live comfortably in your new home.

How to Save Enough for Home Down Payment

The process of saving for a home purchase can seem quite daunting, but there are many ways to get started.

Create a budget

If you disassemble you Monthly income and expenses, You can understand how much you can save each month to pay for your future home.

Open a high-yielding savings account

These accounts are designed for consumers who are trying to get rid of their money, either as an emergency fund or for long-term goals such as buying a home.Some of our favorites High Yield Savings Account include American Express® High Yield Savings Account * And that Ally Bank Online Savings Account..

Increase income

Saving is the first step, but not many can be undone. If saving alone doesn’t work, ask for a salary increase at work or Side hustle — The side gig that helped save enough money for the house was a freelance writing.

Prepare yourself in other ways as your savings

Having a down payment is not enough.Do your best as you are saving Maximize your credit scoreStart investigating where you want to buy and where you can afford it. That way, when you find the house you want and buy it, you won’t be left behind in an investment you can’t buy.

Conclusion

After all costs are taken into account, buying a home can be quite expensive. However, the hard rule of paying a 20% down payment is only an allegory at this point.

In fact, it’s a good idea to consider putting it down as much as possible. Yes, monthly mortgage payments are high, but it can be beneficial to have a low interest rate mortgage while continuing to invest money in other places, such as the stock market or other real estate ventures.

Keep up with Select’s detailed coverage Personal loan, Techniques and tools, Wellness And so on, and follow us Facebook, Instagram When twitter To keep it up to date.

*American Express National Bank is a member of the FDIC

Editorial Note: The opinions, analyzes, reviews, or recommendations contained in this article are for Select editorial staff only and are not reviewed, endorsed, or otherwise endorsed by third parties.

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