Wishing you could buy a home? It can be challenging to save enough for a down payment, given how much houses now cost.
But many people don’t realize there are myriad programs that offer grants or loans to help home buyers come up with the necessary funds. “There are tons of programs to assist them,” said Deatra Kemp, an advocate for first-time home buyers in Milwaukee.
The programs can ease some of the daunting numbers behind buying a house. The median price of a home has risen to more than $400,000, meaning the once-traditional 20 percent down payment — an amount paid in cash toward the purchase of a home, in addition to the amount borrowed for a mortgage — would be about $80,000. And typical house prices are significantly higher in some parts of the country.
Even 5 to 10 percent down is a stretch because rising rents have made it harder for people to save to buy a home, said Teig Whaley-Smith, chief alliance executive with the Community Development Alliance, a nonprofit group in Milwaukee that promotes affordable homeownership as a path to racial equity. “For working families,” he said, “that’s next to impossible.”
Plus, increasing mortgage interest rates, which drive up monthly costs, don’t help. This week, rates for a 30-year fixed-rate mortgage rose above 7 percent — to an average of 7.04 percent — for the first time since May, according to Freddie Mac, the federally backed mortgage finance giant.
Sonu Mittal, senior vice president and head of the single-family acquisitions division at Freddie Mac, said that outside of high prices and interest rates, which consumers can’t control, raising a down payment “continues to be the No. 1 barrier to homeownership.”