How to save for a down payment as a first-time home buyer.

The general rule most of us have come to understand over the years, is that 20% down is required to have a down payment to buy a home. Fact of the matter is, most mortgages have smaller down payment requirements.

For example, those who qualify for an FHA loan only need 3% of the purchase price. So if you were looking at a $300,000 home (I know, that doesn’t exist in the Bay) you would only need $9,000 down. You would have to pay private equity insurance until 20% home equity is reached. If you were eligible to receive a VA or USDA loan, it would mean no down payment necessary at all.

If you are preparing to buy your first home, how long you should save for your down payment depends on much you can put aside, and how much you plan to spend on a home.

Considering where you are planning to buy, and checking out the median down payment for the area could be helpful.

In California in 2022 in statewide median down payment amount was $108,000. In Missippi, it was less than $7,000. So getting a good idea of the market in your area will help you plan better.

There are a lot of cool options for assistance for first time homebuyers, or people who have not owned a home in the last 3 years, and plan on buying a home as their primary residence. Deferred loan means you don’t have to pay the loan back until you have paid off your mortgage. With forgivable loans, the balance goes away after you have lived in the home a certain number of years.

Down payment assistance loans can give you access to money for the initial cash down, or they could help you cover closing costs. Types of assistance could include grants, low interest loans, deferred payment loans, forgivable loans or individual development loans. There are some federal programs and individual lenders, but most payment assistance is offered through state, county and city programs.

If you think you qualify, check out the State housing finance authority, or HUD website. Also, check in with your city and county, and hit up those government programs. It's out there to assist get over the initial purchase hurdle, so let's get that money!!