Down payments. How much do you need to put down to buy a home? Well not to get too number-y, but according to the National Association of Realtors, 39 percent of non-owners believe they need 20% down, 26 percent believe they need 15-20% down, and 22 percent believe it’s 10-14%.
Well, those are all freaky numbers, especially living in a city like Los Angeles where the median home price in 2016 was about $606,000…and that number is just in the San Fernando Valley *! I recently read an article (click here) that says would-be home buyers actually don’t know, that down payments have dampened the optimism of aspiring buyers. But maybe a little bit more knowledge would help, right? Or is it fear of taking on more debt as expressed in my last blog The 4-1-1 on First-Time Buyers
So here’s the thing: You can actually own a home with a down payment as low as 3%-6%. And you can get a decent interest rate too boot. And you can qualify for an FHA loan, which is a lot more common than you would imagine. But the caveat is credit. Your credit score is one of the things you need to improve if it’s not in the zone of qualifying. On top of that, look at your debt-to-income ratio. If at the end of the day, you’re spending as much as you’re making, putting 3% down is not going to cut it if you want to be approved for a loan. Your debt-to-income ideally needs to be in the 40-50% range if you want to qualify for a conventional loan. Did you know that?
Long story short, you can acquire the American Dream without putting 20% down on a home, but you just have to have the rest of your life in order! Ha! I really don’t mean to be facetious or anything, but it’s important to be knowledgable and wise with where you are in life and what you’re making versus what you’re spending.
Hopefully this puts things in a little perspective! Feel free to search new listings on my KW SITE HERE! I’m happy to help with any real estate questions you may have!
*SRAR Comparable Sales Analysis of SFV