Aspirations of home ownership is strong for America’s families, yet findings from the fifth annual America at Home survey from NeighborWorks America indicate several perceived barriers to homeownership among the majority of consumers.
Findings from the survey, which consisted of 1,000 U.S. adults and 500 millennials include many misconceptions about what it takes to buy a home:
• The average millennial mistakenly thinks the minimum required down payment is 21.6 percent.
• Approximately 73 percent of all consumers and 62 percent of millennials said they were not aware of or are unsure about down payment assistance programs in their communities for middle-income homebuyers.
• Seventy percent of adults feel they don’t have enough money saved for a down payment.
Experts believe that confusion about down payment requirements and lack of awareness about assistance programs are holding back many people from pursuing homeownership. “Before deciding if owning a home is right for you, take time to understand your down payment options, and separate myths from facts,” says Freddie Mac Vice President, Danny Gardner.
For example, the average down payment among first-time homebuyers in 2016 was just 6 percent and, for repeat buyers, just 14 percent. What’s more, mortgage options, such as Freddie Mac’s Home Possible Mortgages, make it possible for qualified borrowers to put down as little as 3 percent.
If your down payment is less than 20 percent with a conventional loan, you’ll have to pay private mortgage insurance, an added insurance policy that protects the lender if you are unable to pay your mortgage. However, mortgage rates—despite their rise in recent years—remain at historic lows, providing you with a significant advantage.
There are also millions of dollars available for down payment assistance. A great place to start is right where you live. Many state, county, and city governments provide financial assistance for people in their communities who are well qualified and ready for homeownership.
To help demystify down payments and the homebuying process, free tools and resources are available at myhome.freddiemac.com.
Don’t let misconceptions hold you back from pursuing homeownership. Check out the facts to learn how much home you can afford.