The Down Payment Assistance You Didn’t Know About
Believe it or not, almost 80% of first-time homebuyers qualify for down payment assistance, but only 13% actually use it. And if you’re hoping to buy a home, this is a mission-critical gap to close – fast (see graph below): Here’s what you need to know to make the most of your down payment in today’s housing market. Amplify Your Down Payment Potential For first-time buyers, the name of the game with down payments is making sure you’re taking advantage of all the resources out there designed to help you. And a bunch of them can get you to your goal faster than you may have thought possible. For example, there are loan options that require as little as 3% down, or even 0% for certain qualified borrowers, like Veterans. And let’s not forget down payment assistance, like grants and other opportunities, that help you cover the upfront cost of your down payment. If you’re interested in exploring those options and what you may be able to use to your advantage, connect with a trusted lender. Because if you don't at least see what’s available, you could be leaving money on the table and missing your chance at buying a home. These resources can boost your down payment. And a higher down payment could help lower your eventual monthly mortgage payment, and even avoid or reduce your fees like private mortgage insurance. Don’t Let News Headlines About Down Payments Scare You There’s one more thing to address. News coverage has been talking about how the typical down payment is rising. A report from Redfin states: “The typical down payment for U.S. homebuyers hit a record high of $67,500 in June, up 14.8% from $58,788 a year earlier . . . This was the 12th consecutive month the median down payment rose year over year.” But don’t let those high dollars scare you. Just because the average down payment is rising doesn’t mean down payment requirements are going up. That’s a key piece of the puzzle to understand. It’s really just because people are choosing to put more down to try to offset higher mortgage rates, and current homeowners who are putting their equity to work are using that to increase their down payment on their next home. As HousingWire explains: “. . . buyers are putting down a higher percentage of the purchase price to lower their monthly mortgage payment. And buyers also had more equity from their home sales, which gives them more cushion.” Let’s break those two reasons down a bit: 1. A bigger down payment helps lower your monthly mortgage payment. Affordability has been a challenge for many buyers recently, which is why those who have the ability to make a bigger down payment are going to do so in an effort to lower their future housing costs. 2. Buyers who already own a home have a record amount of equity to leverage. Someone who bought a home a few years ago has gained a significant amount of value in their house, thanks to home price appreciation. These people can put down much more than the average first-time buyer who hasn’t owned a home yet. Next Steps What’s the best thing to do? Talk with a trusted lender about your options. They’ll help you figure out where you stand today and how to access the resources you may qualify for. Because help is out there, you just need to work with a pro to take advantage of it.
This Is the Sweet Spot Homebuyers Have Been Waiting For
After months of sitting on the sidelines, many homebuyers who were priced out by high mortgage rates and affordability challenges finally have an opportunity to make their move. With rates trending down, today’s market is a sweet spot for buyers—and it’s one that may not last long. So, if you’ve put your own move on the back burner, here’s why maybe you shouldn’t delay your plans any longer. As you weigh your options and decide if you should buy now or wait, ask yourself this: What do you think everyone else is going to do? The truth is, if mortgage rates continue to ease, as experts project, more buyers will jump back into the market. A survey from Bankrate shows over half of homeowners would be motivated to buy this year if rates drop below 6% (see graph below): With rates already in the low 6% range, we’re not terribly far off from hitting that threshold. The bottom line is, that when they drop into the 5s, the number of buyers in the market is going to go up – and that means more competition for you. That increased demand will likely push home prices up, which could potentially take away from some of the benefits you'd gain from a slightly lower interest rate. As Nadia Evangelou, Senior Economist and Director of Real Estate Research at the National Association of Realtors (NAR), explains: “The downside of increased demand is that it puts upward pressure on home prices as multiple buyers compete for a limited number of homes. In markets with ongoing housing shortages, this price increase can offset some of the affordability gains from lower mortgage rates.” So, while waiting to buy may seem like a smart move, it could backfire if rising prices outpace your savings from slightly lower rates. What This Means for You Right now, you’ve got the chance to get ahead of all of that. Today’s market is a buyer sweet spot. Why? Because a lot of other buyers are waiting – which means not as many people are actively looking for homes. That means less competition for you. At the same time, affordability has already improved quite a bit. Recent easing in mortgage rates has made homeownership more accessible. As Mike Simonsen, Founder of Altos Research, says: “Mortgage payments on the typical-price home are 7% lower than last year and are 13% lower than the peak in May 2024.” And while the supply of homes for sale is still low, it's also higher than it’s been in years. According to Ralph McLaughlin, Senior Economist at Realtor.com: “The number of homes actively for sale continues to be elevated compared with last year, growing by 35.8%, a 10th straight month of growth, and now sits at the highest since May 2020.” This means you now have more options to choose from than you’ve had in quite a while. With fewer buyers in the market, improving affordability, and more homes to choose from, you have the chance to find the right one before the competition heats up. Why Waiting Could Cost You If you’re waiting for the perfect time to buy, it’s important to understand that timing the market is nearly impossible. The longer you wait, the higher the risk that market conditions will shift—and not necessarily in your favor. As Greg McBride, Chief Financial Analyst at Bankrate, says: “It’s one of those things where you should be careful what you wish for. A further drop in mortgage rates could bring a surge of demand that makes it tougher to actually buy a house.” Next Steps Don’t wait until you have to deal with more competition and higher prices – you already have the chance to buy a home while we’re in the sweet spot today. Let’s connect to make sure you’re taking advantage of it.
What Credit Score Do You Really Need To Buy a House?
When you're thinking about buying a home, your credit score is one of the biggest pieces of the puzzle. Think of it like your financial report card that lenders look at when trying to figure out if you qualify, and which home loan will work best for you. As the Mortgage Report says: "Good credit scores communicate to lenders that you have a track record for properly managing your debts. For this reason, the higher your score, the better your chances of qualifying for a mortgage." The trouble is most buyers overestimate the minimum credit score they need to buy a home. According to a report from Fannie Mae, only 32% of consumers have a good idea of what lenders require. That means nearly 2 out of every 3 people don’t. So, here’s a general ballpark to give you a rough idea. Experian says: “The minimum credit score needed to buy a house can range from 500 to 700, but will ultimately depend on the type of mortgage loan you're applying for and your lender. Most lenders require a minimum credit score of 620 to buy a house with a conventional mortgage.” Basically, it varies. So, even if your credit isn't perfect, there are still options out there. FICO explains: “While many lenders use credit scores like FICO Scores to help them make lending decisions, each lender has its own strategy, including the level of risk it finds acceptable. There is no single “cutoff score” used by all lenders, and there are many additional factors that lenders may use . . .” And if your credit score needs a little TLC, don’t worry—Experian says there are some easy steps you can take to give it a boost, including: 1. Pay Your Bills on Time Lenders want to see that you can reliably pay your bills on time. This includes everything from credit cards to utilities and cell phone bills. Consistent, on-time payments show you’re a responsible borrower. 2. Pay Off Outstanding Debt Paying down what you owe can help lower your overall debt and make you less of a risk to lenders. Plus, it improves your credit utilization ratio (how much credit you're using compared to your total limit). A lower ratio means you’re more reliable to lenders. 3. Don’t Apply for Too Much Credit While it might be tempting to open more credit cards to build your score, it's best to hold off. Too many new credit applications can lead to hard inquiries on your report, which can temporarily lower your score. Next Steps Your credit score is crucial when buying a home. Even if your score isn't perfect, there are still pathways to homeownership. Working with a trusted lender is the best way to get more information on how your credit score could factor into your home loan.
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