How Quickly Can You Save Your Down Payment?

Saving for a down payment is often the biggest hurdle for afirst-time homebuyer. Depending on where you live, median income,median rents, and home prices all vary. So, we set out to find outhow long it would take to save for a down payment in eachstate.

Using data from HUD, Census and Apartment List, wedetermined how long it would take, nationwide, for a first-timebuyer to save enough money for a down payment on their dream home.There is a long-standing ‘rule’ thata household should not pay more than 28% of their income on theirmonthly housing expense.

By determining the percentage of income spent renting in eachstate, and the amount needed for a 10% down payment, we were ableto establish how long (in years) it would take for an averageresident to save enough money to buy a home of their own.

According to the data, residents in Kansas can save for a downpayment the quickest, doing so in just over 1 year (1.12). Below isa map that was created using the data for each state:

What if you only needed to save 3%?

What if you were able to take advantage of oneof Freddie Mac’s or FannieMae’s 3%-down programs? Suddenly, saving for a downpayment no longer takes 2 to 5 years, but becomes possible in lessthan a year in most states, as shown on the map below.

Bottom Line

Whether you have just begun to save for a down payment or havebeen saving for years, you may be closer to your dream home thanyou think! Let’s get together to help you evaluate yourability to buy today.