Buying a home takes some serious planning. One of the most important things to keep in mind is how much you will be able or are willing to pay for the down payment.
Conventional mortgages typically requires a 5 to 20 percent down payment on a home while there are other mortgageprograms such as an FHA loanthat lets you input only 3.5 percent if you fit their standard requirements.
That is one thing to consider. Before you determine the amount of your down payment, you must know which mortgage programs are available to you as that will be a large determining factor as to how much should you prepare.
But whatever this amount may be, the number of months or years it may take you to earn the money you need may depend on where you live.
A Study
In a recent study by SmartAsset, they have determined roughly just how much it would take for you to save the money you need to pay the down payment of your home.
The following shows the results in select cities where the study was targeted:
| CITY | YEARS |
| San Francisco, Calif. | 9.84 |
| Los Angeles, Calif. | 9.38 |
| New York, N.Y. | 9.27 |
| San Jose, Calif. | 7.20 |
| San Diego, Calif. | 7.01 |
| Chicago, Ill | 4.59 |
| Austin, Texas | 4.17 |
| Philadelphia, Pa. | 3.80 |
| Phoenix, Ariz. | 3.45 |
| Dallas, Texas | 3.09 |
| Jacksonville, Fla. | 2.92 |
| Houston, Texas | 2.85 |
| Columbus, Ohio | 2.83 |
| Indianapolis, Ind. | 2.82 |
| San Antonio, Texas | 2.50 |
Methodolody
To come up with these numbers, the researchers used data on median home prices and median household income in the 15 largest cities in the country. They then proceeded to calculate the time it would take for a single household to save enough money for a 20 percent conventional down payment requirement. That is if the consumers saved 20 percent of their incomes.
Conclusion
These numbers can help many potential borrowers in these key cities structure their home buying plans and budgeting in the future. Note that it takes twice the time to save in Illinois as it does in Texas for the same down payment amount. That should give you a scale as to how it would cost in your city to reach the same goal, using the nearest city or cities as benchmark/s. It also helps to do some research if you don’t belong in one of these cities.
Remember, however, that the data is only dependent on one factor. Results can greatly vary depending on your income, how many people are contributing to the savings, and how you structure your savings plan.
The following are some helpful tips you can use to start saving for that much needed down payment:
- Crowdsourcing
- Exploring government assistance programs
- Seeking employer assistance programs
- Special lender programs
