Low down payment mortgages can compete in today’s market

Despite the growing prominence of low down payment mortgages, first-time homebuyers believe they need to put 20% down to compete in today’s market, but it’s not true given current market conditions, according to real estate agents across the country.

Redfin conducted a survey between Sept. 15 and Sept. 18, receiving responses from 762 real estate agents in 38 states and Washington, D.C. The results found that more than half of the real estate agents surveyed said the typical down payment for successful buyers in their market was less than 20%.

In fact, one in four said a down payment between 3% and 5% was typical among successful buyers.

This chart from Redfin displays the typical down payment for successful buyers in the market.

Click to enlarge

down payments

(Source: Redfin)

It’s a common misconception for borrowers to think they need to put 20% down on a mortgage, which often becomes the biggest roadblock to homeownership.

And in addition to this, markets across the country are plagued by continued lack of inventory, making borrowers believe a higher down payment will help them compete against other buyers.

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