Is Home Ownership Possible Without a 20% Down Payment?

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Dennis Nottingham
November 23, 2022
4 minutes, 11 seconds
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It used to be that you could easily purchase a home with just a 10% down payment. During the housing boom (before the burst) you could sometimes get a home with as little as 5% or even 0% down. These days, though, it's much more common to see people putting 20% down on Indianapolis homes. The trend is largely due to the recent housing crisis and lenders having a bit less faith in the people who are borrowing. As a result, it's harder for many Hoosiers and people across the nation to purchase the homes that they want and feel that they can afford. Leading up to the housing crisis, banks were being somewhat irresponsible and giving loans to people who couldn't actually afford them. Because of these past mistakes, lenders are now being much more stringent about who they offer loans to. Having 20% down on the home you would like to buy is a solid indicator that you are ready to make the purchase, and banks like to see that. For some people, however, getting together 20% takes a great deal of time. If you're looking to get into a new home within the next few months but have less than 20% to put down, talk to an experienced Indianapolis real estate agent, like the team members at RE/MAX Advanced Realty, to learn about your options.

EXPLORING ALTERNATIVES TO THE 20% DOWN PAYMENT

Options your realtor may discuss with you include alternatives to traditional home loans like VA loans and government mortgage assistance programs. For example, if you’re a first time homebuyer, you may qualify for a FHA loan through the U.S. Department of Housing and Urban Development (HUD). With a FHA loan, you can put down as little as 3%, sometimes less. However, keep in mind that the higher your down payment, the less expensive your monthly mortgage will be. Another way to avoid a hefty down payment is to consider other housing options. By turning to a professional realtor, you can become informed of housing that will still work for you and your family, but at a lower price point. For example, instead of considering a three-bedroom single-family home, you may consider a condo or townhouse instead. In many cases a townhouse can give you almost as much room as a single-family home and at a significantly lower price. Whatever your situation, it's a good idea to make sure you have a solid plan in place for affording your home before you make any buying decisions. Working with an experienced realtor can help you determine precisely how much house you can actually afford. Once you have your parameters in place, your realtor can help you find something that will work within your budget. You may be surprised what you are able to find in Indianapolis without having to count pennies. Working with the best realtors in the area will give you access to listings you might not have been able to find on your own. Call RE/MAX Advanced Realty today at 317.298.0961 to learn more.

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