In the world of real estate, down payments have emerged as a significant financial factor for homebuyers across the United States, and St. Louis is no exception. A recent report from LendingTree sheds light on the dynamics of down payments, and it’s essential for prospective buyers and sellers in St. Louis to understand how the local market fares in this regard.
St. Louis Down Payment Statistics:
St. Louis ranks 42nd out of the nation’s 50 largest metropolitan areas in terms of average down payments. This ranking places it 9th in terms of the lowest down payment amount in the 50 largest metros.
The average down payment in St. Louis comes in at $56,251. While this figure may not reach the heights seen in some of the more expensive coastal cities, it’s still a substantial amount.
Down Payment as a Percentage of Income:
One critical metric to assess affordability is the down payment as a percentage of the average annual household income. In St. Louis, the average down payment represents approximately 54.87% of the area’s average annual household income.
Challenges and Opportunities:
For many homebuyers in St. Louis, coming up with a down payment that accounts for over half of their annual household income can present challenges. It may require careful financial planning and discipline to accumulate the necessary funds.
On the positive side, St. Louis fares better than several major metros where down payments exceed 100% of the average household income.
Tips for St. Louis Homebuyers:
Prospective buyers in St. Louis should explore various options for coming up with a down payment, such as saving over time or investigating loan programs that require lower upfront cash.
Additionally, buyers should stay informed about down payment assistance programs available in the St. Louis area that can help make homeownership more accessible.
In summary, while St. Louis may not have the highest average down payments in the nation, it’s essential for local homebuyers to be aware of the financial aspects of purchasing a home. Understanding how down payments align with income and local market conditions is key to making informed decisions in the St. Louis real estate market. Stay tuned to StLouisRealEstateNews.com for more insights into the St. Louis real estate landscape.
There are a variety of down payment assistance providers in the St Louis area where a qualifying home buyer can obtain assistance with their downpayment to buy a home. According to a report just released today by RealtyTrac, the average amount of down payment assistance covers the typical down payment on a median priced home in 4 out of five of the St Louis Counties that make up the core market, with St Charles County being the only exception. As the table below shows, in St Charles County the average down payment assistance of $5,000 falls short of the typical downpayment on a median priced home of $6,150 but still covers most of it. In the other 4 counties the down payment is more than covered.
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St Louis area homes are already affordable based upon the relationship between the median home price and median income for the area, but can become even more affordable when home buyers take advantage of down payment assistance programs that are available throughout the area.
Housing affordability is still good in spite of rising prices-
Data for April, from RealtyTrac, shows house payments on a median priced home in St Louis County required 23% of median income and in St Charles County required just 21% of median income while the national average was 23%. Even with the hot market we have been in, and rising home prices in St Louis, affordability for April in both St Louis County and St Charles County were still lower than their historic norms of 24% and 22% respectively.
Downpayment assistance programs make homes even more affordable –
There are several (over 50) down payment assistance programs in Missouri with many of them available in the St Louis area. To see a complete list of downpayment assistance programs available, along with complete program information, visit Downpayment Assistance Programs For Missouri.To give you an idea of the type of assistance that is available, below is some data from buyers that received down payment assistance in the St Louis area in April 2015:
In St Louis County the average down payment help benefit received was $6,125.00 which represented 3.53% of the median sales price.
In St Charles County the average down payment help benefit received was $5,000.00 which represented 2.5% of the median sales price.
There are 24 down payment help programs available to people buying homes in St Louis County and 16 programs averrable to people buying in St Charles County.
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Down payment help is available for 87 percent of the homes in the U.S., according to an analysis completed recently by RealtyTrac and Down Payment Resource. This analysis looked at the geographic location of homes to see if they were within areas where down payment assistance are available to purchasers meeting the qualifications of the program.
In the St Louis area, there are several down payment help, or down payment assistance programs, available, most of which are administered by the Missouri Housing Development Commission (MHDC). These programs include:
Cash Assistance Loan Program (CAL)
Qualified first-time homebuyers may receive a second mortgage equal to 3% of their mortgage amount which can be used for down payment or closing costs.
The loan is a five-year loan at 0 percent interest with no monthly payments required. The loan will be forgiven after the buyer has occupied the home for 5 years.
Non-Cash Assistance Loan Program (NON-CAL)
Qualified first-time homebuyers that do not need down payment assistance can obtain a lower interest rate home loan than those that use the CAL program above.
Because of the lower interest rates, borrower will have a lower monthly payment.
The best down payment assistance program in St Louis though is the BMO Harris Bank Affordable Housing Grant Program. This program is available to all qualified home buyers (not just first-tome buyers) and, instead of being a loan that may be forgiven after living in the home for a period of time, it is a no-strings attached grant that can be used for down payment or closing costs. Grants of up to $3,000 are available to home buyers that purchase homes in specified neighborhoods throughout St Louis. Click HERE to find out more about this great down payment help program!
Whatever funds the borrower intends to use to close a transaction has to be sourced and seasoned. Providing proper asset documentation and the actual source of the funds is a critical element of the approval and closing process. There’s nothing worse in a real estate purchase than making it all the way through the hoops and hurdles of the approval process just to have a loan fall apart due to the borrower not using an acceptable source of funds in order to close. In other words, “Mattress Money” is no longer a legitimate source. Continue reading “St Louis Mortgage Rate Update; Cash-To-Close must be Seasoned and come from the Proper Source“
In the next few days, look for FHA to implement further changes to strengthen its financial situation. An audit in late 2009 showed that the capital ratio of its Mutual Mortgage Insurance Fund (MMIF) had fallen below its statutorily mandated threshold. Over the past few months, FHA has raised premiums on its FHA insurance, prohibited seller-financed down payment assistance, stepped up enforcement of its regulations, tightened appraisal rules, banned several lenders from writing FHA guaranteed loans and brought suit against others. Continue reading “FHA Expected to Announce Further Policy Changes to Address Risk and Strengthen Finances; St. Louis Mortgage Watch“
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