Buying a home can be an intimidating process for any buyer, but especially for first time buyers. 

One of the most frequent questions we get from first time buyers is whether they should have 20% of the cost saved to put down on the purchase of their first home. While there are obvious advantages to this (smaller monthly payments and avoiding private mortgage insurance which protects your lender), I’m here to tell you that, in today’s market, this is NOT necessary! As long as the monthly numbers make sense for you, you don’t need to wait until you can put 20% down. Here’s why: 

• There are lots of loan options that can help you decrease your down payment. Paying $70,000 down on a $350k house (along with closing costs that could be 2-5% of the purchase price) is a lot of money, and not always feasible for first time buyers. With USDA, FHA, VA, and even some conventional loans, it’s actually possible to get into a new home with only 5%, 3%, even 0% down! 

• You’ll miss out on equity. In MA, equity is forecasted to rise 4-9% in the next year. This means that, in the time you wait to go in on a house in order to save 20%, the same house will be MORE expensive. This can turn into a vicious cycle, and you are missing out on the equity you could be accruing. 

Pro tip: It can also be possible to get out of a PMI situation down the road with refinancing with your accrued equity down the line.

If all these numbers sound confusing and intimidating to you, don’t stress: the important thing is to have a trusted, local lender who knows all your mortgage options and can help you decide what’s right for you and your family. Reach out to us and we can help figure out what’s best for you today!

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