When asked, most Americans who don’t own a home say they’d like to become homeowners someday. Regardless of current market conditions or the state of the economy, the desire to own a home endures. Part of this is because it helps to build wealth. The other part is homeownership’s long-cemented status as a key element of the American dream.
So what’s keeping aspiring homeowners from pursuing their dream? One main factor is coming up with a down payment. The down payment is among the biggest obstacles that keep people from home buying: the traditional 20 percent down payment can be difficult to save up for. So how long does it usually take to save for one?
According to a recent analysis, someone making the median income and saving 10 percent of their earnings each month would take about seven years to save enough for a down payment on the typical American home. Furthermore, since home prices have grown faster than incomes over the past few decades, the amount of time it takes has been increasing. Obviously, if you already have money saved up or if you can save more than 10% of your income, that time will be shorter.
Fortunately, though, a 20 percent down payment isn’t always required, depending on the type of home loan you choose and your credit rating. Also, where you’re looking to buy will affect the amount of time it’ll take. For example, a down payment in Pittsburgh will take just 4.8 years to save, while in cities like Boston or Miami it can take twice that long.