If saving for a down payment has kept you from your dream of homeownership, you’re not alone.
According to a survey from National Association of Realtors (NAR), Saving for a down payment is the biggest obstacle to homeownership that first-time home buyers cite, and they’re looking for financial help. Twenty-two percent of first-time buyers have used a gift or loan from friends and family to come up with a down payment, according to the NAR study.
Common Down Payment Barriers
- Loss of income or changes in income
- Unexpected medical expenses or debt
- Higher costs of living
- Other savings goals take precedence
- Misconceptions about how much down payment is required
Debunking the 20% Myth
One of the biggest misconceptions among homebuyers is how much downpayment is actually required. The idea that a 20% down payment is required is still circulating, despite the fact that first time homebuyers can put down as little as 3%.
According to another survey from National Association of Realtors (NAR), 35% of consumers think they need 16% to 20% for a down payment and 10% of consumers think they need more than 20% for a down payment. With that expectation in mind, it may seem incredibly discouraging to imagine saving for a home or condo.
Don’t count yourself out of homeownership because you’ve been struggling to save for a down payment. Not only can first time buyers put down as little as 3% , there are also down payment assistance programs and loans with 100% financing.
Down Payment Assistance and Zero Down Loans
A trusted mortgage lender can also be an excellent resource for homebuyers, especially when choosing the right loan for their financial situation. They can provide a thorough breakdown of program requirements and benefits for programs like the following:
HomeBoost
The HomeBoost minority down payment assistance program offers up to $15,000 in grant funding to qualified first-time homebuyers in Michigan and Indiana once program requirements are met.
Learn more: HomeBoost down payment assistance
MSHDA Loans
Qualified borrowers in Michigan can receive up to 10,000 in down payment assistance through MSHDA.
Learn more: MSHDA Home Loan Requirements
VA Loans
This US government program is aimed at helping veterans purchase a home and has no down payment or PMI for qualified borrowers.
Learn more: VA loan requirements
USDA Loans
A USDA home loan, otherwise known as a Rural Development Loan, is a zero down payment mortgage for homes in rural areas.
Learn more: USDA Loan Requirements
Technology That Can Help When Saving for a Down Payment
You don’t have to overcome savings challenges alone. Using automated savings apps are another savings tool to keep in your arsenal.
Empower Finance App
The Empower Finance app connects with your bank and summarizes your current expenditures, like bill cycles, subscriptions, debt, and loans. Users get the big picture of where their money is going and can move extra funds to savings.
Learn More about Empower Finance
Qapital APP
Qapital allows users to set rules for when and how much savings they put aside based on specific actions. For example, users can input that for every $50 they spend on online shopping, $10 will go into savings.
Learn More about Qapital
Chime App
Chime’s keep the change feature rounds up to the nearest dollar on transactions and automatically moves those funds to a savings or investment account. Users can also delegate a portion of their paycheck to Chime’s “savings jar.”
Learn More About Chime
About Michigan Mortgage Lender, Julie Krumholz from Superior National Bank
Julie Krumholz from Superior National Bank is part of a participating FHLBank Indianapolis member financial institution and can help you apply for programs like HomeBoost, MSHDA, and VA loans. With over 30 years of experience, Julie has worked in nearly every facet of the mortgage industry, from processing, closing, loan origination, underwriting, QC auditing, and even co-owning a mortgage brokerage firm. Julie applies her knowledge to help first-time and seasoned homebuyers with a seamless homebuying experience.
