One of the biggest misconceptions associated with buying a home is that you need a down payment of 20 percent of the home price. The median down payment for buyers under age 37, a group that typically includes a majority of first-time buyers, was just 7 percent last year, according to the National Association of Realtors.
One reason more buyers choose to make a smaller down payment is that it can take years to save enough for a larger down payment. In the meantime, home prices are rising, pushing homeownership further out of reach.
It would take an average of 36 years for someone earning the median income in the District of Columbia to save for a 20 percent down payment on a median-priced house, according to a recent report from U.S. Mortgage Insurers, an association representing private mortgage insurance companies. Only California residents would face a longer period — 37 years — to save for a 20 percent down payment.
In the state with the shortest time period to save 20 percent — Indiana — residents would need 12 years. The study found that it would take Maryland residents 18 years to save for a 20 percent down payment and Virginia residents 20 years.