First Time Home Buyer? What You Need to Know About Mortgages

Most new home buyers have little to no concrete knowledge about what it takes to buy a home. And with all of the conflicting information on the internet, it’s no wonder. We’ve always been told the standard amount of money to put down on a new house is 30%, which puts buying a starter home almost impossible for a lot of potential buyers. However, that amount has changed, and now a lot of young people (we’re often called millennials) are confused about exactly what is expected of them with regards to down payments and mortgages.

Recently, the National Association of Realtors surveyed non-owners and found that 39% thought they had to put down more than 20%, 26% thought 15-20% was acceptable, and 22% thought they could get away with 10-14%. Shockingly, the average amount of money put down on a house last year was only 11%, and among the under-35 crowd, it was more like 8%! So why the disparity?

It probably has something to do with how the market is changing, and what we’ve been told by our parents, who grew up in different times. These days, if you can get a VA or USDA loan, you may not be required to put anything down on a new home. The average amount put down on a home in 2016 for that age bracket was $3,500. That’s would barely get you a running car, and yet it’s working for younger people purchasing houses. They’re taking out the loads mentioned above (or a FHA loan, which is targeted towards first-time buyers), and they only need about a 639 credit score to do it. If you’re despairing about not being able to afford a first-time home, you don’t need to. It’s not as hard as it seems, and there’s help out there if you look for it!