By Sabrina Karl
Each year, the National Association of REALTORS publishes a profile of statistics on home purchases during the past year. In our previous installments here, we’ve dug into who bought the homes, the types of homes they purchased, and how they navigated the buying process. Now, in Part 4, we take a look at the NAR’s findings on how Americans financed their home purchases.
Financing is far and away Americans’ leading method for affording the purchase of a new home. Among all buyers during the 2018-2019 twelve-month period, 86 percent opted to finance their purchase with a mortgage.
Among first-time buyers, the amount they financed averaged 94 percent of the home’s value, while repeat buyers financed just 84 percent on average. Across all buyers, the typical loan-to-value ratio was 88 percent.
For about 1 in 8 buyers (13 percent), the most difficult step in the home-buying process was saving up a sufficient down payment. Sixty percent indicated their down payment source was personal savings, while the next most common source was proceeds from the sale of a primary residence, which 38 percent reported as funding their down payment.
For buyers who indicated saving for a down payment was difficult, more than half (51 percent) said that student loan obligations were their biggest financial obstacle. In second rank, 45 percent cited credit card debt. Auto loan payments were reported to make saving for a down payment difficult by 38 percent of this year’s home buyers.
Still, Americans find it worth it, with 81 percent saying they view purchasing a home as a good financial investment.
The REALTORS’ annual survey was conducted in July 2019, capturing homebuyers who purchased between July 2018 and June 2019. Responses were received from over 5,800 buyers, with results weighted to represent U.S. population demographics.