Boston Condos for sale Sale and Rent

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Boston condos for sale: Downpayment less than 20%

There’s a common misconception that, as a Boston condo buyer, you need to come up with 20% of the total sale price for your down payment. In fact, a recent survey by Lending Tree asks what is keeping consumers from purchasing a homeFor over half of those surveyed, the ability to afford a down payment is the biggest hurdle.

That may be because those individuals assume a 20% down payment is necessary. While putting more money down if you’re able can benefit buyers, putting 20% down is not mandatory. As Freddie Mac puts it:

The most damaging down payment myth—since it stops the homebuying process before it can start—is the belief that 20% is necessary.”

If saving that much money sounds overwhelming, you might be ready to give up on the dream of homeownership before you even begin – but you don’t have to. According to the Profile of Home Buyers and Sellers from the National Association of Realtors (NAR), the median down payment hasn’t been over 20% since 2005. It may sound surprising, but today’s average down payment is only 12%. That number is even lower for first-time homebuyers, whose average down payment is only 7%.

Based on the Home Buyers and Sellers Generational Trends Report from NAR, the graph below shows an even closer look at the down payment percentage various age groups pay:

Boston condos for sale

Boston condos for sale

As the graph shows, the only groups who put 20% or more down on average are older homebuyers who likely can use the sale of an existing home to fuel a larger down payment on their next home.

What does this mean for you as a Boston condo buyer?

If you’re a prospective homebuyer, it’s important to know you don’t have to put the full 20% down. And while saving for any down payment amount may feel like a challenge, keep in mind there are programs for qualified buyers that allow them to purchase a home with a down payment as low as 3.5%. There are also options like VA loans and USDA loans with no down payment requirements for qualified applicants.

To understand your options, you do need to do your homework. If you’re interested in learning more about down payment assistance programs, information is available through sites like downpaymentresource.com. Be sure to also work with a real estate advisor from the start to learn what you may qualify for in the homebuying process.

Boston Condos and the Bottom Line

Don’t let the myth of the 20% down payment halt your homebuying process before it begins. If you want to purchase a home this year, let’s connect to start the conversation and explore your options.

Boston Condos for sale Sale and Rent

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A lot of people who are interested in buying a Boston condo start to worry about their finances after hearing they need to provide a 20 percent down payment on a Boston condo. However, it is often possible to buy a Boston condo for sale without a massive down payment. Though 20 percent may be the recommended amount of down payment for a property, it is not a requirement. Use these tips to lower your down payment so you can buy a property without having to save up as much.

Look into Real Estate Government Loans 

The best way to get a smaller down payment is to go with a government-backed loan. Lenders are more willing to accept a lower down payment when the government is ensuring the loan. For example, Veterans Affairs mortgages do not require any down payment and Federal Housing Administration mortgages only require a 3.5 percent down payment. Keep in mind you might have to meet qualifications like being a veteran or finding a government-approved lender, but if you can get one of these loans, they are very helpful.

Get a Piggyback Mortgage

As long as you can make a down payment of at least 10 percent, you can try a piggyback mortgage, which is technically two mortgages. Your down payment would cover roughly 10 percent of the purchase, the main mortgage covers about 80 percent of the loan, and the secondary mortgage covers the remaining 10 percent. Due to the shifting housing market, more and more lenders are allowing this type of mortgage lately. It can include a bit of extra hassle and paperwork, but you normally do not need to pay for an appraisal, title insurance, or other required fees twice.

Find Down Payment Assistance Programs

With down payment assistance programs, you can essentially get a low or no-interest loan for the down payment, which allows you to agree to a higher down payment without having to offer your own money as the down payment at the time of closing. There are both government-run and nonprofit agencies that offer down payment assistance as a way of boosting homeownership.

Pay for Private Mortgage Insurance

If you cannot make a high down payment, you may find that lending institutions want you to pay for private mortgage insurance, which protects the lender if you default on your loan. The rates for private mortgage insurance tend to be calculated based on credit score, so this is normally only a good option for buyers who have an excellent credit score of over 760.

Before beginning your search for a Boston condo for sale, determine how much you can afford for a down payment. When you’re ready to start looking at the many great condos, lofts, and penthouses in the area, get in touch with the reliable agents at Ford Realty at 617-595-3712.

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