I have said it multiple times this year, 2023 will be the year of the First Time Home Buyer!!! And if you are a First Time Home Buyer, your time is running out. With only 3 short months until the New Year rings in, we predict interest rates will decline with the pending election year.
Did you know, 40% of First Time Home Buyers opt out of purchasing because they don't believe they have enough of a down payment to purchase? The common misconception is you need 20% for a down payment on a home. Did you know, you can get in with as little as 3.5% of a down payment? Or there are several other programs, 5% down, 10% with a second, and many more options. Our preferred Lender, Natalie Moles from Diversified Capital even had options of 0% down for Veterans of the United States Military, Teachers, etc. What about Grant Programs such as SCCAOR (Santa Clara County Association of Realtors) who offer $10,000 to First Time Home Buyers if they are below the 100% AMI (Households that make less than $168,500 in annual income).
The idea of the 20% down payment as a standard dates back to the Great Depression, when mortgages were usually shorter than the 30-year term that is standard today (and down payment requirements were often even higher than one-fifth of the property’s cost). In the following decades, many government-backed mortgages mandated a 20% down payment.
That’s a daunting figure at today’s prices. The typical house in Santa Clara County has a median price of around $1,800,000. Applying the 20% rule would mean you would need $360,000.
If you qualified for the FHA Program, a 3.5% down payment program; although you would be subject to sales price restrictions, the 2023 conforming loan limit for a single-family home in Santa Clara County, CA is $1,089,300, you would only need $38, 125 for a down payment!
So, if you are reading this and are on the fence as a First Time Home Buyer, reach out to your qualified Mortgage Broker and explore options. The two best ways to grow generational wealth is through investing in Real Estate and the Index Fund.
So, start today!
The Moles Group