With mortgage rates and housing prices remaining stubbornly high, many potential first-time buyers are wondering whether homeownership is in the cards for them, or if they’re destined to pay rent forever. For most of these would-be homeowners, it’s not the monthly costs (like taxes and mortgage payments) that are preventing them from putting their name on a deed. It’s the down payment.
The down payment is the initial lump sum a buyer pays during a real estate transaction, and it almost always represents a significant percentage of the total purchase price. While the conventional down payment is 20 percent, buyers who believe they are locked out of the housing market because they don’t have that much cash on hand are doing themselves a disservice.
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