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But many aren’t buying a house — because they can’t save the money.

3 minute read

A majority of Americans agree that buying a home is a good financial decision, but a recent national survey reveals four in 10 can’t even get past the first hurdle: the down payment.

With the nation’s home prices hitting record marks — the median home is valued at $200,000, a price tag that surpasses even the pre-recession peak — it’s no wonder a down payment seems daunting.

The survey, commissioned by Unison Home Ownership Investors and released last month, hit on some legit reasons for potential buyers to stomp on the brakes.

More than half (56 percent) said they don’t make enough money or have too much debt to save an adequate sum.

What kind of debts? Student loans, for one. Americans have racked up more than $1.3 trillion in student loans. In one analysis earlier this year, more than a third of adults said they had student debt and, as a result, a majority said they didn’t want to take on a mortgage, too.


The problem isn’t all in their bank accounts. For some, it’s in their brains. They don’t really know how much they need to save.

Three in 10 expect a bank to require 10 percent down. Almost a quarter felt it would be more reasonable to come up with 5 percent, according to the Unison survey.

In fact, the minimum down payment required for a conventional loan is 3 percent. An FHA loan, one insured by the federal government, requires 3.5 percent. There are even loans to be had for no down payment.

On the other hand, if you want to see real savings when you buy a home, come up with 20 percent down. That way, you lower your monthly payments by avoiding private mortgage insurance.

The median down payment nationally clocks in at 6 percent for the first-time buyer, according to online real estate outfit Zillow.

With so much conflicting information out there, does it surprise anyone that would-be home buyers don’t know who to trust? According to Unison’s survey…

  • 54 percent say their real estate agent is credible.
  • 43 percent would trust their family and friends, or their bank.
  • Only 12 percent would trust their local newspaper.

If the down payment weren’t trouble enough, about a third of would-be buyers said getting approved for a loan is a headache.

But as they ponder how much money to save, how to save it, and how to get past the paperwork involved, these folks are renting.

Rents across the country have been on a northward trajectory, increasing by about 3.4 percent over the last two years, reports one national survey. That rise in rent is outpacing inflation and growth in hourly wages.

In most states, this makes renting a rotten alternative, because it costs more to rent than to own, and the money isn’t going toward any sort of investment. On the other hand, a study from GoBankingRates found 11 states where the inverse was true: Better to rent than own.

The people in the Unison study are feeling the pinch either way — 57 percent were worried about the high price of renting, while 53 percent were stressed by the cost to buy.

The newest home dwellers feel it the most, with 60 percent of millennials reporting the monthly rent or mortgage is straining their budget, compared to 58 percent of Gen Xers and 43 percent of baby boomers.

The irony about saying you can’t buy a home because you can’t save enough money for the down payment? More than half of the people who want to buy, want to because they figure it will help them save money they can then spend on something else.

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About the Author

Michelle Bryan

Michelle Bryan

Before Michelle began writing about how to save money, she made money as a successful real estate investor and also worked as an Organic Foods reporter and opinion columnist. She is an expert in corporate brand management, so she understands how advertisers try to separate you from your money. Her work has appeared on sites as diverse as Forbes, NBC News, Huffington Post, Yahoo, GoBankingRates, U.S. News and World Report, City Pulse, Newsday, On Call and more… When she isn’t trying to get people out of debt, she’s trying to get them to travel frugal and eat organic and cheap – the Arizona State University journalism major writes passionately on the topic. She attended the prestigious Walter Cronkite School of Communication and Journalism with a major in Mass Communication and Media.

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