How Much Is an Average Down Payment on a House?
According to a recent survey, the average down payment for a home was between $10,000 and $15,000, or about 5 percent-6 percent of the total purchase price for a typical US home, according to thelendersnetwork.com. Only a few decades ago, it wasn’t uncommon for homebuyers to put 20 percent down, and more. Even if the average home down payment today seems like a lot to gather, it’s a fraction of what it once was. Setting financial priorities before you begin searching can help reduce the stress of buying a home. We’re here to help you navigate the process so you can save money and avoid some common mistakes along the way.
When Is the Down Payment Due?
A portion of the down payment is due very soon after the seller agrees to your offer. It’s broken down into two sections: The earnest money and the remainder of that balance.
Your earnest money deposit (otherwise known as a good faith deposit) is due within three business days of a signed and accepted offer to purchase. This money will be deposited into a trust or escrow and will be paid out at closing. The balance of your down payment is due right before closing, when ownership of the property officially changes hands.
Does My 20 Percent Down Payment Cover Closing Costs?
There’s a big difference between your down payment and your closing costs. Closing costs typically cover the payment of fees, taxes and other monies due at closing. So, are closing costs included in your 20 percent down payment? The short answer: not usually. Sometimes, the buyer will request that the seller agree to a higher purchase price so that those extra funds can be applied to closing costs. You’ll be responsible for covering these closing costs unless you and the seller specifically define the terms otherwise in your purchase agreement.
Understanding just how much your new home will cost you really depends on the financial choices you make and the way you negotiate your deal. But with a little homework and a lot of determination, you can land the home you’ve always wanted at a price that works for you. While you’re considering your down payment options, remember to check in with your American Family Insurance agent. They’re able to customize a policy that fits your budget and the exact needs of your home.