While lending rates remain at all-time highs, 48% of U. S. homebuyers say they don’t know if they’ll be able to afford a home, according to a recent survey by non-public finance site Credit Karma.
The study, conducted among 1,249 adults between Nov. 20 and Nov. 26, 2023, also found that more than a portion (56%) of prospective buyers are unsure they can buy as much home as they had planned.
Some are making concessions in square footage, according to Credit Karma, while others are reconsidering neighborhoods and school districts. Nearly a third of investors (30%) said they rely on money from family members to help them close the deal.
If you’re hurting for your dream home, CNBC Select offers several tips to make that dream a reality.
The days of the 20% down payment are long gone, yet homebuyers still have to shell out more to secure a sale than they have in years.
In 2023, the average down payment for first-time homebuyers will be 8% of the total home price, according to the National Association of Realtors. This is the highest rate since 1997, when it was 9%. For repeat buyers, the average down payment is 19%, the highest since 2005, when it hit 21%.
With housing prices still inflated, that can put a down payment out of reach for many.
One way to get a down payment together faster is with a high-yield savings account (HYSA), which can accrue up to 6% interest annually, compared to the 0.46% average from traditional savings accounts. While there are other ways to invest, most HYSAs allow you to withdraw funds at any time with no penalty.
Western Alliance Bank’s high-yield savings account earns 5. 32% consistent with the year, with no maintenance fees or withdrawal limits and a minimum of $1 is required to keep the account open.
5.32% APY
$1 Deposit
None
Up to 6 transactions consistent with the month
The bank would possibly qualify a payment if there are insufficient funds
No overdraft fees
No
No
Terms and conditions apply.
UFB Secure Savings offers a 5. 25% APY with no account opening fees, no monthly fees, and no minimum monthly balance. There is an overdraft fee, but UFB provides overdraft coverage to approved customers.
Earn up to 5.25% APY
None
None
No maximum number of transactions; Possibly maximum movement amounts would apply
None
Overdraft fees may be charged, according to the terms, but a specific amount is not specified; overdraft protection service available
Yeah
Yes
Terms apply.
Read our UFB Secure Savings review.
The better your credit score the more likely you are to get attractive mortgage terms. There are mortgage options for borrowers with credit scores as low as 500, but you’ll likely have to put a lot more down and face much higher interest rates. A FICO score of 620, considered “fair,” is the minimum for a conventional loan. Even if you’re doing better than that, taking six months to work on improving your credit score could cut your mortgage by hundreds of dollars a month. Focus on making on-time payments, polishing off existing debts and keeping your credit utilization under 10%.
For more help, there’s Experian Boost, a free feature that links your Experian credit report to household expenses that are usually covered through credit bureaus, such as rent, phone, and streaming services.
Free
13 points, effects vary.
Experian®
FICO® Score
Results will vary. See for details.
How to sign up for Experian Boost:
Learn more about eligible payments and how Experian Boost works.
States, cities, and financial institutions sponsor homebuyer schemes. Many are aimed at first-time buyers or others in low-income categories. The U. S. Department of Housing and Urban Development’s online page is available for the Housing and Urban Development Department. The U. S. Department of Homeland Security provides links to damaged systems throughout the state.
In Georgia, the Georgia Dream Homeowners program awards grants of up to $12,500 to buyers who have owned a home for at least 3 years.
California’s MyHome Assistance program is helping buyers finance their down bills with loans of up to 3% of their home’s value.
New York City’s HomeFirst loan program offers up to $100,000 for a down payment to qualified applicants with a household income under $79,200.Bank of America’s Community Homeownership Commitment program provides grants of up to $10,000 for a down payment and up to $7,500 for closing costs. Wells Fargo Dream Plan Home program provides up to $5,000 in closing-cost credits for borrowers whose income is 80% or less of the area median when buying a primary home in eligible areas.
If maximum loan rates are the biggest hurdle, you can check to get an affordable loan. Under this agreement, the customer assumes the loan from the seller at the same interest rate.
Since loan rates are still high, this can save you a lot of money. However, its functions are limited, as government-backed loans such as FHA loans, USDA loans, and VA loans are assumable.
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Even when loan rates and housing are high, measures like extending your down payment and credit score can bring you closer to financing your dream home.
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