Rising Childcare Costs Hurt Homeownership

Blog posted On January 14, 2020

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One of the most commonly reported barriers to buying a first home is saving for the down payment.  Student loan debt is a huge factor in preventing would-be first-time home buyers from saving, and most recently, rising childcare costs may also be a cause.  Freddie Mac issued a recent report on how the rising cost of childcare is hurting renters and delaying home purchase.  The report found the cost of housing has increased 14% in 25 years, while the cost of childcare has increased 49% over the same period.  

Freddie Mac chief economist, Sam Khater, explained, “One of the major challenges, when it comes to affording a home, is the high cost of childcare.  […] “Specifically, we find they, on average, pay about half of the median mortgage payment and nearly eighty percent of the median rent.”

The cost of childcare varies based on the location and the needs of the family.  On average, a family will spend between $715 - $758 each month on childcare, depending on whether or not one or both parents are employed.  With younger children, the cost jumps to $948 each month.  Saving for a down payment becomes increasingly unachievable with ongoing student debt repayment and childcare costs.  If the young family is paying a mortgage payment instead of monthly rent, at least they are building equity they can access in the future to pay down high-interest debt or afford college tuition. 

If you are a first-time home buyer looking to transition from renting to owning a home, you may benefit from using down payment assistance.  There are over 2,500 down payment assistance programs available nationwide to help renters become homeowners.  Down payment assistance is available at the federal, state, and local levels to help would-be home buyers of all income levels and financial profles. 

Types of Down Payment Assistance


Second Mortgage Loans

Tax Credits

Funds that you do not have to pay pack if you own and occupy your home for a certain period of time.

Typically have low or zero interest rates and the payments are deferred for an initial period of time.

Some state and local governments, including housing finance agencies, issue mortgage credit certificates to reduce the amount of federal income tax you pay at tax time.

1 in 6 home buyers actually get down payment assistance from the home’s seller!

Low Down Payment Options

Today, saving for a 20% down payment may take 7 years or more.  However, the average down payment on a house is only about 6% of the purchase price.  What are you waiting for?

No Down Payment Home Loans

Low Down Payment Home Loans


VA Loan – available to qualifying Veterans and active-duty military.

FHA Loan – down payments ranging from 3.5% to 10%.

Online down payment gifting platform where friends and family can contribute to your down payment using debit or credit cards.

USDA Loan – available in select Rural and Suburban areas.

Fannie Mae HomeReady – down payments as low as 3%.

Freddie Mac Home Possible – down payments ranging from 3% to 5%.

If you have any questions about using down payment assistance to buy a home, please let me know. 


Conventional Payment example: If you choose a $250,000, 30 year loan at a fixed rate of 4.00% (APR 4.15%), with an LTV of 80%, you would make 360 payments of $1,215.26 Payment stated does not include taxes and insurance, which will result in a higher payment.


Sources: Down Payment Resource, HousingWire