Many Austinites are eager to buy a home — but are they ready for the down payment?
Austin is home to a lot of potential homebuyers, but many of them aren’t stashing away much money for a down payment, a new survey shows.
In the survey, 81 percent of renters in Austin indicated they’re planning to buy a home at some point. However, 42 percent of those future homeowners haven’t set aside at least $1,000 toward a down payment, according to the survey conducted by rental marketplace Zumper.
In Dallas, the survey indicated even more would-be homeowners — 46 percent — hadn’t saved at least $1,000 for a down payment. The same figure for future homeowners in Houston was 33 percent.
A survey earlier this year by real estate marketplace Zillow found that socking away money for a down payment was the biggest barrier to homeownership for renters.
“Thanks largely to low mortgage interest rates, monthly mortgage payments are generally more affordable than monthly rent payments, making homeownership an attractive financial option for many current renters,” Zillow says. “But the sometimes hefty down payments required to buy in the first place are preventing many renters from taking advantage of the savings.”
Zillow’s chief economist, Svenja Gudell, says that although it’s possible to make a down payment as low as 3 percent, the tradeoff is a higher interest rate along with expensive private mortgage insurance (PMI).
In the Zumper survey, Austin and Houston were tied for the most aspiring homeowners (81 percent), with Dallas well behind at 72 percent.
Houston ranked highest among the three cities for residents who believe the American Dream involves homeownership (74 percent). Austin came in second place (66 percent), with Dallas in the basement (57 percent).