Myth 2 : I Need To Have a 20 % Down Payment
As you set out on your homebuying journey , you ' re likely working on saving for your purchase . But do you actually need to save 20 % for your down payment ?
A Common and Costly Misconception
If you ’ ve asked anyone for advice on how much to save , chances are at least one them suggested you should save 20 % of the purchase price for your down payment . While that ’ s great if you ’ re able to do so , saving that much can be especially challenging for first-time buyers .
But there ' s good news . While well-intended , that advice is likely based on a common misconception .
The National Association of Realtors ( NAR ) says :
“ One of the biggest misconceptions among housing consumers is what the typical down payment is and what amount is needed to enter homeownership .”
The truth is , you may not need to save as much as you think . Unless specified by your loan type or lender , it ’ s typically not required to put 20 % down .
The Benefits of 20 % Down
While you usually don ’ t need to put 20 % down , doing so can have some great perks , if you ’ re able . Those may include :
1 . Your interest rate may be lower .
2 . You ’ ll end up paying less over the life of your loan .
3 . Your offer will stand out .
4 . You won ’ t need Private Mortgage Insurance ( PMI ).
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