The polll conducted by the National Foundation for Credit Counseling (NFCC), a national nonprofit credit counseling organization based in Silver Spring, Maryland, also found that just 12 percent of respondents feel they would have no trouble coming up with a 20 percent downpayment. An additional 20 percent said they would need a loan that allowed a much lower downpayment, and 18 percent said they would have to borrow the downpayment money regardless of how much is required.
According to the NFCC, finding the money for a downpayment for a home was historically only a problem for first-time homebuyers. But after purchasing their first home, buyers could normally satisfy the downpayment requirement on a new home from the proceeds of the sale of their former house. However, this is no longer the case, the NFCC said.
Due to today’s turbulent housing market, the problem of being unable to afford a downpayment has now spread to those who currently own a home, the organization explained. With many mortgages underwater, even if the homeowner is able to sell his or her current house, there may be no profit available to satisfy the downpayment on the next home.
And further exacerbating the problem, the NFCC said, is that as home prices have decreased, many lenders have increased the downpayment amount required to obtain a mortgage loan.
“With the average home price in America just below $200,000, a 20 percent downpayment is near $40,000, a nice chunk of change by any standard,” said Gail Cunningham, spokesperson for the NFCC. “Some may still be able to obtain an FHA loan with a low downpayment requirement, but those with poor credit will likely have to put a larger amount down.”
Even with the economy improving, a staggering number of people are still out of work, and the retirement plans of many others have been decimated, Cunningham said. As a result, she said buying a home may no longer be a part of the American dream—at least not in the near future.
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