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Do You Need 20% Down to Buy a Home?

By: Huntsville Real Estate Expert Mike Manosky On August 27, 2021

You are ready to purchase your first house. Your credit score is great. You know you can afford a monthly mortgage payment based on your budget. You are sure you will be approved for a mortgage loan. But that down payment!  How the heck are you supposed to come up with 20%? Don’t despair, because the truth is, you don’t need a 20% down payment to purchase a house!

Saving for a down payment on a house can seem overwhelming for many people. Keep in mind that it can come from various sources. Funds can come from bank accounts, stocks or mutual funds, an inheritance, or a gift from a family member. Some people will even use assets from their retirement portfolio. Requirements regarding where the money comes from for your down payment depend on the type of loan. Also, purchasing a primary residence usually requires a lower down payment than if you are purchasing a second home or buying an investment property. 5 Types of Mortgage Loans for Homebuyers

The myth about down payments is that 20% is the norm. While that may have been true in the past, it’s not anymore. The fact is that in 2020, the average down payment was just 12%, per Unfortunately, a lot of people don’t even consider buying a home because they still think they need 20% down. In fact, more than three-fifths (62%) of Americans think you need a down payment of 20% or more to buy a home, according to the NerdWallet 2020 Home Buyer Report. Not true!

So, now that you know you don’t need 20%, perhaps buying a home seems more within reach.  But there are still some things you should be aware of before taking that first step toward homeownership. Various factors are at play in determining if you should take on a mortgage with lower down payment. For example, the less you put down, the larger your mortgage payment will be each month. That is because you will have a larger loan amount, possibly a higher mortgage interest rate and the added cost of mortgage insurance. So, while you don’t have to come up with more cash, your monthly costs go up. What is Mortgage Insurance?

Once you have educated yourself about the requirements, you can make informed decisions about your budget and how much you can afford. Don’t let the 20% down payment myth stop you from pursuing your dream of home ownership! 

If you are looking to buy or sell a home in the Huntsville area, let professional Realtor Mike Manosky help you with all your real estate needs!  Give him a call today at 256-508-0211 and check out  for more information! 

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