EXCLUSIVE: You Need as Little as 3% – Not 20% for Down Payment, Expert Tells First-Time Home Buyers

Photo by Tierra Mallorca on Unsplash

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For the first-time homebuyer, it can be overwhelming to find the right mortgage to fit your budget. The issue of capital can be a significant hindrance to mastering the needed courage to take the first step to owning a home.

Many first-time home buyers have been working towards saving a 20% down payment to advance their dream of homeownership. This sum, to an extent, has hindered many people’s journey to achieving this dream.

As housing prices across the United States continue to skyrocket with price tags beyond the reach of many home buyers – especially first-timers – the challenge of coming up with a 20% mortgage down payment can be extremely difficult. Waiting to save that large of a down payment could mean missing out on the ideal home.

But in most cases, the 20% down payment requirement could be more of a myth than what is actually needed.

No Need for 20% Down Payment?

Katie Barish, executive vice president (EVP) of purchase at Rocket Mortgage, a subsidiary of Rocket Cos. Inc. RKT expressed dismay that many first-time homebuyers believe they need a 20% down payment.

“When you’re preparing to buy a home, you want to be saving not just for maintenance costs of owning a home, but obviously there’s a down payment,” Barish told Benzinga. “There’s always a down payment. Now, what a lot of folks believe, and I’m still shocked at the number of people that believe this, is that you have to have 20% down when you’re buying a home. You do not have to have a 20% down payment in most situations.”

The amount of the down payment depends on the type of home you’re purchasing or whether it’s an investment property, but most of the time, a 20% down payment is not required, Barish said.

Barish recommends talking to a mortgage professional to help keep your money in your pocket – especially if you’re a first-time buyer.

“You want to keep as much money as you can in your pocket so that you’re prepared for those hidden expenses,” she said. “You don’t want to get caught off guard when something breaks - because something will break.”

Rocket Mortgage is the nation’s largest mortgage lender and helps millions achieve the dream of homeownership. It has revolutionized the industry with the world’s first completely online mortgage experience. and quick access to customer service might set Rocket Mortgage apart from other lenders. 

Dan Gilbert founded the company that would become Rocket Mortgage in 1985 – the name was changed to Rocket Mortgage in 2021 with the aim to create a place that made getting a mortgage a little easier. The company’s goal is to help clients find the perfect home, and its service doesn’t stop after the deal is closed.

Barish urged first-time home buyers to work with a mortgage professional to make sure they are preapproved before they start looking at homes and get emotionally attached to one.

“You want to know that you can actually afford to buy the home,” Barish said. “It’s just putting yourself in the right place emotionally, and it’s putting yourself in a position where you can act in a competitive market to make an offer right away.”

Full-Service Home Buying Experience

Barish assured clients that Rocket Mortgage would not leave them hanging in the journey to acquiring the perfect home. 

“We believe in ease of the process and transparency. You need to know where you stand inside in this process from start to finish. If you have questions, you need to be able to get them answered quickly.

“We can help you find the perfect home; we can help you connect with a real estate agent through sister company Rocket Homes. We can help you with the mortgage when you close on your loan. The chances are you will be serviced by Rocket Mortgage, so we can help you after you close as well. And then you have access to a wide variety of partnerships. Sister company Rocket Auto can help if you want to buy a car, and Sister company Rocket Loans can help with a personal loan. Rocket Can help you with everything in between all of life’s moments.” 

This post contains sponsored advertising content. This content is for informational purposes only and not intended to be investing advice.