How Quickly Can You Save Your Down Payment?
Faster than you might imagine!
Saving for a down payment is often the biggest hurdle for a first-time home buyer. Depending on where you live, median income, median rents, and home prices all vary. So, we set out to find out how long it would take the average person to save for a down payment in each state.
Using data from HUD, Census and Apartment List, we determined how long it would take, nationwide, for a first-time buyer to save enough money for a down payment on their dream home. There is a long-standing ‘rule’ that a household should not pay more than 28% of their income on their monthly housing expense. For example, 28% of $5,000 in monthly income equals $1,400 for paying a mortgage.
By determining the percentage of income spent renting in each state, and the amount needed for a 10% down payment, we were able to establish how long (in years) it would take for an average family to save enough money to buy a home of their own. According to the data we analyzed, residents in Kansas can save for a down payment the quickest, doing so in just over 1 year. In larger metropolitan areas it would take longer as housing costs are also higher than in rural areas.
What if you only needed to save 3%?
What if you were able to take advantage of a 3%-down program? Suddenly, saving for a down payment no longer takes 2 to 5 years, but becomes possible in less than a year in most states.
Whether you have just begun to save for a down payment or have been saving for years, you may be closer to your dream home than you think! If your plans for 2019 include purchasing a home, visit us at hfamiami.com/homebuyers to learn about our first-time home buyers’ mortgage, low interest rates and down payment assistance programs. Note, information in this post was derived from freddiemac.com