One of the biggest hurdles homebuyers face is saving for a down payment. As you’re budgeting and planning for your home purchase, you’ll want to understand how much you’ll need to put down and how long it will take you to get there. The process may actually move faster than you think.
Using data from the U.S. Department of Housing and Urban Development (HUD) and Apartment List, we can estimate how long it might take someone earning the median income and paying the median rent to save up for a down payment on a median-priced home.
Since saving for a down payment can be a great time to practice budgeting for housing costs, this estimate also uses the concept that households should not pay more than 28% of their total income on monthly housing expenses.
According to the data, the national average for the time it would take to save for a 10% down payment is around two and a half years (2.53). Residents in Iowa can save for a down payment the fastest, doing so in just over one year (1.31). The map below illustrates this time (in years) for each state:
What if you only need to save 3%?
What if you can use one of the available 3% down payment programs? It’s a common misconception that you need a 20% down payment to buy a home. Still, more affordable options and down payment assistance programs are available, especially for first-time buyers. In reality, saving for a 3% down payment may not take several years. It could take less than a year in most states, as shown in the map below:
Bottom Line.
Wherever you are saving for a down payment, you may be closer to your dream home than you think. Let’s connect with real estate professionals in Chicago at KM Realty Group LLC to explore the down payment options available in our area and how they support your plans.
