The median is available in June Home price in the US reaches $ 363,300, so the national association of real estate agents. This is a record high and reflects a price increase of 23.4% over the average cost of an existing home a year ago.
When looking for a home, you may be wondering how much money you need to raise to buy one. Here’s what you need to know.
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Ideally, each homebuyer would pay a 20% deposit. With an average home price of $ 363,300, that would mean you would have to save $ 72,660 to pay a down payment on a typical home in the United States.
That’s a lot of money. However, a 20% deposit has many advantages, including:
- Avoiding Private Mortgage Insurance (PMI): SMEs Policyholders have to pay when they make small down payments to protect lenders in the event of foreclosure. (A small down payment increases the risk that the lender won’t get enough foreclosure money to complete the mortgage.)
- A wider range of lenders: More and more lenders are willing to partner with borrowers who will pay 20% less.
- A lower mortgage rate: A high down payment often enables a loan at a cheaper one Mortgage rates due to the lower risk of the loan to the lender.
- Less chance of landing underwater: You don’t want to owe more than your home is worth. This can happen if you make a small down payment and then property values go down. If so, you might not be selling your home enough to pay off your loan. You would be trapped unless you could bring more money to the table or your lender agreed to a bad credit short sale where you would pay back less than the full amount.
If you can’t come up with $ 72,660 to buy a mid-price home, don’t despair. It is definitely possible to buy a home with less than a 20% discount, and many buyers end up doing so.
In fact, there are options such as VA loanthat do not require a deposit. Other government-secured loans, such as FHA loans, only require 3.5% down. So you could get into a mid-priced property with as little as $ 12,715.50 down payment when you get an FHA loan.
For well qualified borrowers conventional lenders (which are unsupported by the government) may even allow a 3% deposit, which would lower that required amount even further to $ 10,899.00.
When you take advantage of these low down payment options, you can incur more upfront fees and pay more on your loan over time because of the larger credit balance and your interest rate is likely to be higher. You will also have a narrower range of lenders as not all financial institutions offer FHA or VA loans or 3% down loans.
However, if you can’t afford to pay $ 72,660 to get a mid-price home, it’s nice to know that you have options – and the $ 10,899 saving is definitely within reach.