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Is a 20% Down Payment Really Necessary To Purchase a Home?

09/22/21  |  Stephanie Nash

Putting 20% down is not mandatory.



There’s a common misconception that, as a homebuyer, you need to come up with 20% of the total sale price for your down payment. In fact, a recent survey by Lending Tree asks what is keeping consumers from purchasing a home. For over half of those surveyed, the ability to afford a down payment is the biggest hurdle.

That may be because those individuals assume a 20% down payment is necessary. While putting more money down if you’re able can benefit buyers, putting 20% down is not mandatory. As Freddie Mac puts it:

“The most damaging down payment myth—since it stops the homebuying process before it can start—is the belief that 20% is necessary.”

If saving that much money sounds overwhelming, you might be ready to give up on the dream of homeownership before you even begin – but you don’t have to. According to the Profile of Home Buyers and Sellers from the National Association of Realtors (NAR), the median down payment hasn’t been over 20% since 2005. It may sound surprising, but today’s average down payment is only 12%. That number is even lower for first-time homebuyers, whose average down payment is only 7%.

Based on the Home Buyers and Sellers Generational Trends Report from NAR, the graph below shows an even closer look at the down payment percentage various age groups pay:



As the graph shows, the only groups who put 20% or more down on average are older homebuyers who likely can use the sale of an existing home to fuel a larger down payment on their next home.

What does this mean for you?


If you’re a prospective homebuyer, it’s important to know you don’t have to put the full 20% down. And while saving for any down payment amount may feel like a challenge, keep in mind there are programs for qualified buyers that allow them to purchase a home with a down payment as low as 3.5%. There are also options like VA loans and USDA loans with no down payment requirements for qualified applicants.
To understand your options, you do need to do your homework. If you’re interested in learning more about down payment assistance programs, information is available through sites like downpaymentresource.com. Be sure to also work with a real estate advisor from the start to learn what you may qualify for in the homebuying process.

Bottom Line


Don’t let the myth of the 20% down payment halt your home buying process before it begins. If you want to purchase a home this year, let’s connect to start the conversation and explore your options.
Stephanie Nash

Stephanie Nash

Realtor®

About The Author

Luxury real estate agent Stephanie Nash was born and raised on the Peninsula. She currently serves the communities of Woodside, Portola Valley, Atherton, Half Moon Bay, San Carlos, Redwood City, Emerald Hills, and the surrounding areas, from Burlingame to Los Gatos. According to Stephanie, there is so much to love about this area, including the sunny weather, easygoing lifestyle, and the abundance of country property with large parcels, hiking trails, ocean views, and great food.
 
In 1987, Stephanie began her illustrious career in real estate by working in title companies, eventually moving into an assistant role for a top-producing agent. She became a licensed real estate agent herself in 1991. Since then, she has forged a stellar reputation as a trusted advisor for her clients; a compassionate and solutions-driven professional, Stephanie’s clients know that when they work together, they are on track to achieve their real estate goals.
 
With over 30 years of experience in real estate, clients can count on Stephanie to help them find the perfect home. Whether they’re moving to a larger house for their growing family, downsizing to a cozy home, or finding the perfect property with sprawling acres of land, Stephanie knows how to handle each and every situation. She is a great listener, honest navigator, and hardworking agent with a positive attitude and strong ethics. Stephanie's availability and good communication skills set her apart from the competition, and she is proud to have helped many clients achieve their dream of homeownership – including a tremendous sale of a 500-acre property. 
 
Stephanie is grateful for her life, her beloved children, and the wonderful people she meets through her work. In her free time, Stephanie enjoys swimming, spending time with her dog at the beach, cooking for friends and family, and starting a new hobby as a gardener and caretaker for her plants and 13 chickens. 
 

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Stephanie respects residential real estate’s dual role as a personal investment and chief financial one. Whether you are buying or selling a home, it will likely be one of the largest financial decisions you make. Stephanie will be with you every step of the way to expertly guide you.

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Address

2930 Woodside Road
Woodside, CA 94062

CA DRE# 01104524

Stephanie Nash

(650) 995-3820

[email protected]

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