A new study by Zillow found that it takes 11 years for a single homebuyer to save for a 20% down payment, which is 6 years longer than it takes a couple. The good news is that many homebuyers qualify for a low down payment mortgage, which can be as low as zero percent for a veteran and 1% for people getting a conventional mortgage.
Takes Longer to Save for a Down Payment in States with Higher Home Prices
It makes sense that it takes longer to save for a home in states where home prices are higher.
Zillow “combined home values and income data from the Census to estimate how long it would take for both an individual and a couple to save for a 20% percent down payment on the median-priced home, assuming they saved 10 percent of their income every year.”
San Jose, California takes the longest amount of time for a single person to save – an astounding 30.7 years to save a 20% down payment on a home, whereas someone in Indianapolis could save for a home in 7.5 years using the same model.
In Orlando, it takes a couple 5.4 years to save for a down payment, whereas it takes a single person 10.8 years.
Tampa has a similar scale as Orlando, taking a couple 4.7 years and a single person 10.5 years to save a 20% down payment.
Overall, in the U.S., it takes a single person an average of 11 years to save for a 20% down payment for a home, and takes a couple slightly less than half as long.
Home Ownership is Central to Living the American Dream
“Nearly two-thirds of Americans agree that buying a home is a central part of living the American Dream, but for unmarried or un-partnered Americans, that dream is increasingly out of reach,” said Zillow senior economist Aaron Terrazas. “Single buyers typically have more limited budgets, which means they are likely competing for lower-priced homes that are in high demand. Having two incomes allows buyers to compete in higher priced tiers where competition is not as stiff.”
Part of the problem relates to low inventories for affordable homes appealing to single homebuyers. For example, in “Portland, 73 percent of homes are affordable to a couple, but only 6 percent are affordable to a single buyer. For Sacramento buyers, a couple could afford 75 percent of homes while a single homebuyer could afford 8 percent of homes.”
However, a bright spot is that singles and couples tend to look for different types of homes. Couples look for homes that have outdoor space, are near schools, are in the suburbs, and have more bedrooms. Singles, however, do not want or need many of the same features, perhaps clinging more closely to a traditional millennial lifestyle.
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Low Down Payment Mortgages
Thankfully, there are low down payment options for many people, including VA mortgages, FHA, and 1% down payment options on conventional home loans.
Homebuyers who qualify for a 1% down payment on a conventional mortgage can buy a home sooner and start building equity than someone who is saving for a 20% down payment.
And homebuyers who qualify for a zero-down payment mortgage can buy a home even sooner – they only have to save to pay closing costs, and don’t have to save to pay a down payment. This allows homebuyers to act more quickly and buy the home of their dreams.
Related: VA Home Loans
Video: Low Down Payment Mortgage Options
Marimark Mortgage
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