Study: 20 percent down payment myth persists

Photo by Sabine Peters on Unsplash

RISMedia | Odeta Kushi

According to a recent study, about 19 million millennials in the 31 largest metropolitan areas are able to afford a home, yet are not buying one. One reason behind this may be the lack of education around down payments – 40 percent of those surveyed did not know the minimum down payment required by lenders. 

Since hitting a low point of 63 percent in 2016, the homeownership rate has rebounded, largely driven by millennial households purchasing their first homes. Many surveys, like one by Bank of the West, indicate that millennials are no different from previous generations—they view homeownership as a main tenet of the American Dream.

Yet, millennial homeownership rates continue to lag those of their predecessors. In 2015, the millennial homeownership share was lower than that of the two previous generations when they were the same age, according to the Urban Institute. One reason for the gap is that millennials have largely delayed important life choices, such as getting married and having kids, in favor of pursuing higher education. Common misconceptions held by many about what is needed to qualify for a mortgage are also holding back homeownership.

Read the full story here: Dispelling the Myth of the 20 Percent Down Payment