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According to a study from Bankrate, about 43 percent of U.S. millennials say they can’t afford to purchase a home because of the down payment and closing costs.
For younger generations that are able to make a down payment on a house, many of them receive assistance from their parents. According to LendingTree, 78 percent of Gen Z homeowners have received financial support for a down payment, while 54 percent of millennials have.
A lot of potential homeowners think that they need to make a down payment of at least 20 percent to get into a home, but that’s just not the case anymore.
Don’t let a down payment stop you
At Arsenal, qualified first-time borrowers could receive assistance for part or all of a down payment. Home$tart is a down payment and closing cost assistance program offered by Federal Home Loan Bank of Des Moines (FHLB). Learn more about how you can take advantage of this program and get over the down payment hurdle.
Now that we’ve established that a 20 percent down payment isn’t necessary, what can you expect to pay? It’s easy to figure out. Let’s take the median home price in the Midwest of $293,300 and do a little basic math.
3 percent down
$8,799
3.5 percent down
$10,266
5 percent down
$14,665
13 percent down
$38,129
20 percent down
$58,660
How much should you put down on a home?
The amount you put down on a home depends on your unique situation. The more you’re able to put down, the higher your chances of approval are. You’ll also potentially avoid having to provide mortgage insurance and have more room for your budget to breathe with a lower monthly payment. A larger down payment can also help you build more equity in your home if you choose to borrow with a home equity loan or line of credit in the future.
However, a smaller down payment may let you buy a more expensive home. Making a smaller down payment (if coming from your own savings) lets you invest those funds elsewhere and possibly see a larger return on it.
Ultimately, the decision is yours. We’re here to help guide you through your mortgage journey. Feel free to contact us with any questions and we’ll be happy to help.
