How Much Time Do You Need To Save For a Down Payment?

Are you itching to buy a house? Does the thought of finally having a place to call your own that you can decorate just the way you like and pour your love into sound like heaven on earth? Do you scroll endlessly through Zillow listings daydreaming about calling one of those listings home? These could all be signs that you are ready to take the leap and become a homeowner, and it's time to ask yourself, what is holding you back? The thought of buying a home may seem daunting and out of reach, and that's why it is essential to take things one step at a time and work with a real estate agent to help you plan. Buying a home is likely more within reach than you imagined, and you can do it! One of the things that frightens people most about becoming a homeowner is saving for a down payment. It might seem like an impossible task, but the first step is knowing how much you will need to save, what incentives are available to you, and how long it will take. Once you have a goal amount to work toward, the process will become that much more manageable. 

Calculate How Much You Can Spend on a Home 

A common rule of thumb is that you should not spend more than 28% of your total income on monthly housing expenses. Take your yearly income, combine it with any of your co-habitants’ annual incomes, and do the math. This calculation should help you figure out how much you can spend on a monthly mortgage payment and determine the price range of a home you can afford.  

Identify Any Home-Buying Incentives You Qualify For

Before buying a home, it is essential to do the research to figure out if you are eligible for any home-buying incentives in your city or state. The State of Maryland, for example, offers a variety of aid programs, including an incentive for first-time homebuyers that offers money toward a down payment and a low-interest mortgage. Or maybe your workplace offers Live Near Your Work grants. All of these factors will help you figure out what you will need to save for a down payment. 

Determine Your Down Payment Percentage

Determining your estimated down payment can be tricky to figure out. This is an area where your trusted real estate agent can help you explore all of your options. Down payments usually range from 3% - 20% of a home's cost. Many folks believe you need to put down 20% for a down payment. It is true that typically the larger the down payment, the lower your monthly mortgage payment, but there are many options available. 

According to national data, it takes the average family 2.5 years to save a 10% down payment. However, if you qualify for a home-buying incentive program, you may only need to save 3% for a down payment, which may take you less time to save for. The bottom line is that buying a home is likely more within reach than you think and may take even less time than you think. Rather than letting fear hold you back, take the first step and reach out to a real estate agent to help you do the math so you can start your journey. When you're ready, reach out to me through my website or give me a call at (302) 545-8569, and follow my blog for more real estate-related tips.