When it comes to buying their first home, buyers will weigh several key factors before choosing a lender – what will the down payment be? What percentage of this down payment does the homebuyer have to make? What types of credit are there? What creditworthiness is required to secure a loan and how much does the cost of living compare to the monthly housing payment?
Depending on the location, the answers will certainly be different. The online loan marketplace LendingTree offers with its annual Precedence of local markets to determine the best for first-time buyers.
Taking into account the above factors – Average Down Payment, Average Down Payment Percentage, Proportion of Buyers Eligible for a Federal Housing Administration (FHA) Loan, Proportion of Buyers with a Credit Score below 680, and Proportion of Homeowners Who Have 30% of Their Monthly Income spending on housing costs – The LendingTree research team found that Kansas City, Missouri; Oklahoma City, Oklahoma; and Louisville Kentucky took the top three spots.
“Although each of these areas is in the middle of the ranking in terms of the percentage of buyers who take advantage of FHA loans, their high rankings in other categories make them attractive for first-time visitors,” explains LendingTree analyst and author Jacob Canal.
Oklahoma City, Kansas City and Buffalo, New York reported the lowest down payments of $ 33,188 in each region, significantly lower than the average down payment of $ 63,216 on the full 50 subways.
“This means that buyers in these areas are unlikely to have to save as much to pay a deposit as they do in other parts of the country,” notes Channel. OKC and Kansas City, as well as Salt Lake City, also reported the lowest percentage of down payment paid by the borrower, with an average down payment percentage of 10.4, which is about 4 basis points lower than the average of the 50 subways in the study.
Memphis, Tennessee; Las Vegas and Virginia Beach, Virginia had the largest proportion of shoppers with a credit score below 680. Just over 25% of shoppers in these areas have a credit score below 680. (A recent study found that credit requirements loosen up a bit nationwide.)
The author points out that FHA loans for first-time buyers can be especially helpful in expensive, cash-poor areas because they require a lower down payment than some other types of loans. Unsurprisingly, three California cities – Los Angeles, San Diego, and Sacramento – topped the list of FHA loans.
As for the estimated debt to income ratio, Indianapolis; Raleigh, North Carolina; and Buffalo contain the smallest proportion of households that spend 30% or more of their monthly income on housing, which the author describes as “good news for first-time buyers who may not make as much as seasoned buyers.”