Many American consumers believe that you need a 20 percent downpayment to purchase a home. That’s a myth, according to an analysis of home buying activity by the National Association of Realtors. Among those who take out a mortgage to purchase a home, the median downpayment is about 10 percent.
The National Association of Realtors’ Profile of Home Buyers and Sellers provides a glimpse into how Americans finance the purchase of their homes. Consider:
- Eighty-eight percent of home buyers finance their home purchase.
- First-time home buyers (comprising more than one third of all home buyers) typically finance 95 percent of the purchase price of a home (5 percent downpayment), compared with 86 percent for repeat buyers (14 percent downpayment).
- For 59 percent of home buyers, the source of their downpayment was wholly or partially their personal savings. Thirty-eight percent of home buyers used all or part of the proceeds from the sale of a primary residence, contributing to the larger downpayment for repeat buyers.
- For 13 percent of buyers, the most difficult step in the home buying process was saving for a downpayment. Of those buyers, nearly half said that student loans made saving for a downpayment more challenging. Forty-two percent cited credit card debt as being their primary challenge; 37 percent cited car loans.
- Of all home buyers surveyed, 65 percent were married couples, 18 percent were single females, 7 percent were single males, and 8 percent were unmarried couples.
Find more interesting statistics about buying or selling a home by reading the full report.