As a real estate professional, one of the biggest myths I see needing to be dispelled is how much San Diego home buyers need to save for a down payment. The idea of saving 20% squashes dreams to own a home. Well the good news is you may not need as much money to put down as you think!
Saving for a down payment is often the biggest hurdle for a first-time homebuyer. Depending on where you live, median income, median rents, and home prices all vary.
What if you only needed to save 3%?
What if you were able to take advantage of one of Freddie Mac’s or Fannie Mae’s 3%-down programs?
Suddenly, saving for a down payment no longer takes 5 or 10 years, but becomes possible in a year or two for many people!
How to make money with only 3.5%
Buying a home in San Diego in one of only a few ways to make money with putting very little money into the initial investment. Think about it…by putting down only 3.5% of the purchase price, you are leveraging ‘other people’s money’ in the form of a loan to invest in real estate.
The average property here in San Diego increases in value roughly 3.6% annually, and up to 8% over ten years. Compare this to putting your money into banks, which only offer low interest rates, and require you to come up with the entire amount, vs. making money on your mortgage loan that you don’t have to pay off until you sell it! It’s a complete win win situation!
Using data from the United States Census Bureau and Zillow, we determined how long it would take, nationwide, for a first-time buyer to save enough money for a down payment on their dream home. There is a long-standing ‘rule’ that a household should not pay more than 28% of their income on their monthly housing expense. (or 45% in California!).
By determining the percentage of income spent renting in each state, and the amount needed for a 10% down payment, we were able to establish how long (in years) it would take for an average resident to save enough money to buy a home of their own.
According to the data, residents in California can save for a down payment the quickest in just under 5 years. If you are thinking of investing in another state, it could be even faster!
Whether you have just begun to save for a down payment, or have been saving for years, you may be closer to your dream home than you think! Call or text me to find out if you qualify for a low down payment home purchase today!
Home By Tristen with Gold Coast Real Estate
606 Camino El Dorado Encinitas CA 92024