First-time homebuyers can gain confidence by understanding the true costs of homeownership, moving past initial sticker shock. A 20 percent down payment is often not required, with typical first-time buyer down payments ranging from six to nine percent, though this may involve Private Mortgage Insurance (PMI). Lenders primarily assess a buyer's debt-to-income (DTI) ratio and focus on the monthly PITI (principal, interest, taxes, insurance) payment.
For an average $400,000 home with a six percent down payment ($24,000), the monthly PITI could be around $2,500 to $2,700. The article contrasts renting, which offers flexibility but no equity and variable costs, with buying, which provides long-term stability through fixed-rate mortgages and equity building, despite requiring maintenance budgets. Prospective buyers are encouraged to get pre-approved to understand their actual affordability, as a hard credit check is a necessary part of this process. Progressive's UpPayment® program offers up to $13,500 in down payment assistance to eligible first-time homebuyers.
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