Many Americans dream of owning a home, but prospective first-time buyers face numerous hurdles—particularly with down payments.
This was the consensus from a recent LendingTree survey of more than 2,000 U.S. consumers, which found that the majority of would-be homeowners stress about affording a down payment, and common misconceptions about how much they should put down may be holding them back.
Key findings:
- Down payments hold back many from homeownership. 81% of prospective first-time buyers are stressed about affording a down payment.
- Misconceptions about how much a consumer must put down may be an additional barrier. More than a third of Americans—and 41% of those who’ve never owned a home—believe they must put down 20% to buy a home.
- Private mortgage insurance (PMI) can be confusing, and many Americans (60%) have no idea how to get rid of it.
- Nearly a quarter (24%) of homeowners say their loved ones helped with their down payment, either as a gift (16%) or loan (8%). This surges to 37% among millennial homeowners.
- Nearly 30% of prospective first-time buyers hope to finance their down payment with a personal loan—but most lenders don’t allow this.
The takeaway:
“A smaller down payment may make it harder for you to get approved for a loan, and it might also result in getting a higher interest rate if you’re approved. With that said, because so many homeowners put less than 20% down, most would-be homebuyers probably don’t need to worry too much about not being able to put 20% or more down,” said LendingTree’s Senior Economist, Jacob Channel.
To view the full report, click here.
