Survey: Down Payment Biggest Obstacle to Homeownership

Posted On April 18, 2017

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A recent Zillow survey reveals nearly 70% of renters report saving for a down payment as the largest barrier to homeownership.  With rents reaching record highs, the average rent costs nearly 50% of the median income in many cities.  Even with the delay in buying a home, most renters cite homeownership as a goal.  63% of survey respondents are confident they will someday own a home, 25% believe it will happen in the next three-to-five years.

For most conventional mortgage financing the borrower with excellent credit will put down 10-20% of the home’s value as a down payment.  For low down payment options, like Federal Housing Administration (FHA) loans, a lower down payment is allowed, but the loan will carry a mortgage insurance premium.  Depending on the borrower’s financial profile, low down payment options may or may not be suitable. 

Zillow Chief Economist Svenja Gudell explained “while it is possible to put down as little as 3% on a home, the trade-off is a higher interest rate and costly private mortgage insurance. […] With interest rates rising in 2017, it’s important to remember that a lower interest rate can save buyers thousands of dollars over the life of their loan.”

As of 2016, the national homeownership rate had dropped to a record low, from a record high in 2004.   In addition to the down payment, other obstacles renters face is the inability to qualify for a mortgage (50%), debt (50%), and job security (40%).  Over time, owning a home is typically more affordable than renting, especially when mortgage interest rates are low. 


Sources: CNBC, HousingWire