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New Downpayment Plan Will Be a Major Setback

July 6, 2011

Some are calling for 10%, some for 20%. But how would needing a larger down payment actually affect home buyers? Well, it could set them back, often more than a decade. Now don’t get me wrong, down payments are not a bad thing, but raising the minimum could have drastic consequences. The Center for Responsible Lending has a chart showing how long it would take different occupations to save for the big purchase. They took the average purchase price for 2010, which is $172,900, and listed the time difference for a required 10% down payment. So, some examples they gave:

▪ U.S. Army Staff Sergeant: 16 years (median salary: $30,176)

▪ Public school teacher: Nearly 15 years (median salary: $33,530)

▪ Firefighter: 10 years (median salary: $47,730)

▪ Police officer: Nearly 9 years (median salary: $55,620)

Now keep in mind, they haven’t ruled out a 20% down payment, so can you imagine how many buyers would be forced out simply because it could take 20+ years to save that much?! This could greatly affect the market, and I am anxious to see what ends up being decided.

How many of your buyers can afford 10% or 20% down?

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