Department of Agriculture, but those are only available for some home purchases (the house or property has to meet certain criteria). The same is true for USDA loans, which are backed by the U.S. Armed Forces, you might qualify for a VA loan, which doesn’t require any down payment at all (and has no private mortgage insurance requirement). And if you’re an active, reserve or honorably discharged member of the U.S. In fact, FHA loans can require as little as 3.5 percent down. Many lenders let you put down less cash, and several loan products themselves require less money as a down payment. Related: Do you really need a 20% down payment to buy a home? And according to the National Association of REALTORS(R), about 81 percent of first-time homebuyers buy their first houses with a down payment of less than 20 percent. That’s great news, because if you’re buying a $250,000 home, that would mean you have to stash away $50,000 – a tough feat for most Americans. And while that would really benefit you today (that’s 20 percent less that you have to borrow from the bank, and you won’t have to buy private mortgage insurance, or PMI), it’s not always necessary to fork over that much cash when you want to buy. Historically, you had to come up with 20 percent of a home’s listing price as a down payment. Below is each market's median starter home price, along with its average down payment and the average yearly income required to afford a starter home there, based on the costs of the mortgage, insurance, and property tax calculated by Point2.If you’re like most people who are buying a home for sale in Lake City or a nearby community, you know that you’ll need to come up with a down payment.īut just how much cash do you need to buy a home? Is it really 20 percent of the home’s listing price? What’s a Standard Down Payment When You Buy a Home? To help house-hunters search, Point2 compiled a list of median prices for homes under 1,400 square feet in the 100 largest secondary markets in the US.įifteen of those towns have average required down payments of $50,000 or less, according to data from Point2. Though prospects for first-time homebuyers seem grim, it's worth noting that starter homes in smaller secondary cities haven't been completely picked over yet. 15 towns with relatively affordable homes It's no wonder why so many would-be homebuyers have decided to stay put, even though many are still dealing with record rent prices. "But as it turns out, unaffordability can put a dent in homeownership plans regardless of city type or size." "These cities used to be fruitful house-hunting grounds for first-time buyers exploring less-expensive options away from main cities," Ciuntu wrote. Though those markets tend to be less competitive, Ciuntu noted that first-time homebuyers must battle with second-home buyers, Baby Boomers looking to downsize, and even real estate investors for those homes. Unlike in previous decades, homebuyers can't count on finding affordable starter homes in so-called "secondary" cities that neighbor larger metropolitan areas. "It's not just the concept of a starter home that's pretty much disappeared, but the home itself - in main markets, as well as secondary ones," wrote Alexandra Ciuntu, a real estate writer for Point2, in a recent report about the starter home shortage. Houses that are 1,400 square feet or less are built at lower rates than in previous decades. And not only are such homes much harder to find, but they're also way more expensive. ![]() ![]() The firm found that the share of starter homes built has fallen from about 70% in the 1940s to just 7% in the early 2020s. Starter homes, or those that are less than 1,400 square feet, were prevalent in past generations but are now rare, according to research from real estate data site Point2. The home shortage, which stems from decades of underbuilding and current owners' reluctance to sell, is especially challenging for those who don't already own property and are on a budget. Hopeful homebuyers must contend with elevated mortgage rates and stubbornly high property prices while facing fierce competition due to a limited nationwide supply of houses. Keep in mind that in addition to your downpayment, youll also have to pay some closing costs as a homebuyer. It feels like it's never been more difficult to become a first-time homeowner in the US. On a 300,000 home, that means the average buyer would put down 18,000 well short of 60,000 that would be required for a 20 down payment that many financial gurus recommend. Here are 15 towns where the average down payment on a starter home is $50,000 or less.Affordable starter homes that were once ubiquitous can now be rare finds.Buying a home is costly and difficult while the US is still dealing with a home shortage.Account icon An icon in the shape of a person's head and shoulders.
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