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REAL ESTATE
Don’t Sweat That 20 Percent Down Payment Rule of Thumb
You Can Buy a House With Much Less Down
American home prices are at a record high of nearly $420,000 nationally. If you’re a first-time homebuyer paying that amount for a home and you want to put down the gold standard of 20 percent, that means shelling out $84,000.
For many Americans, and especially first-time buyers, $84,000 represents an unachievable sum. After all, according to , most Americans would struggle to cover an unexpected expense of $1,000 from their emergency savings.
But for cash-strapped first-time purchasers, the fact that you don’t have $80,000 in your bank account doesn’t have to end your dream of homeownership. There is a workaround: Just make a lower down payment.
While 20 percent down gives you the best combination of mortgage rate and fees, you can put down much less. Years ago, I put down 10 percent as a first-time buyer, and there are plenty of loan programs that let you put down 5 percent, 3.5 percent, even nothing. If you’re otherwise ready to buy and the amount of your down payment is the only thing holding you back, you have my blessing to put down less than 20 percent.
