Assistance Programs Save $17K Over Life of Loan

IRVINE, CA— RealtyTrac , the nation’s leading source for comprehensive housing data, today released a joint report with Down Payment Resource analyzing the impact of down payment assistance on the cost of buying a home.

Daren Blomquist

The report found that buyers using available down payment assistance programs can save an average of $17,766 representing 41% of a year’s wages compared to buyers who do not use down payment assistance. The report was released at the National Association of Real Estate Editors 50th Annual Journalism Conference in New Orleans .  It analyzed the down payment and monthly house payments for a median-priced home in 513 counties nationwide. The total savings breaks down to an average savings of $5,965 on the down payment for a median-priced home, and an average savings of $11,801 on monthly house payments over the life of the loan for a median-priced home. The report combined public record sales deed data for single family homes and condos collected by RealtyTrac with average down payment assistance data collected from 2,477 down payment assistance programs across the country by Down Payment Resource along with the latest average weekly wage data available at the county level from the Bureau of Labor Statistics . “Saving for a down payment can be difficult for prospective first-time homebuyers given the absence of substantial wage growth in recent years combined with the burden of student loan debt many are struggling under,” said Daren Blomquist , senior vice president at RealtyTrac. “Even just a 3% down payment requires 14% of annual wages on average across the 513 counties we analyzed, and in 67 counties a 3% down payment requires more than one-fifth of annual wages.” “Homeownership programs not only help buyers overcome the initial cost of purchasing a home, but also produce a compounding positive impact on the homeowner’s saving and wealth-building capability,” said Rob Chrane , CEO at Down Payment Resource. “In fact, these programs are now the last frontier in the fight to preserve homeownership affordability. Rates are never going to be substantially lower, and home prices continue to trend higher.” Markets where buyers using down payment assistance programs can realize the biggest total dollar savings compared to buyers not using down payment assistance were Kauai County, Hawaii ($80,148 total savings over the life of the loan); Placer County, CA , in the Sacramento metro area ($78,539); San Francisco County, CA ($77,411); Orange County, CA in the Los Angeles metro area ($74,268); and Shasta County (Redding), CA ($70,806). Other markets with total savings of more than $50,000 over the life of the loan included counties in Miami, New Orleans, Seattle, Orlando , and New York . “Any ability that buyers have to assist with current down payment requirements is positive — especially when we consider our region’s first time buyers who are sometimes facing an uphill battle as to whether to continue paying escalating rents, or save towards a down payment on a home,” said Matthew Gardner , chief economist at Windermere Real Estate , covering the Seattle market. “However, Seattle’s housing market remains incredibly competitive and many buyers are either paying cash or have substantial down payments. These buyers are seen as lower risk than those using down payment assistance and are therefore more likely to win in a multiple-offer situation.”