First-time buyers using Stimulus for deposits
According to Redfin, nearly one in four first-time buyers use stimulus money for their down payment. Stimulus money is the second most common way to accumulate money for a down payment, after saving directly from paychecks.
The recent report is based on a survey commissioned by Redfin of 1,500 US residents planning to buy or sell a home in the next 12 months. The data focuses on the 215 of those 1,500 respondents who answered, “How did you accumulate the money you need for a down payment?” »
“There was a good deal of economic uncertainty at the start of the pandemic and many people initially lost their jobs due to widespread closures. But many Americans, especially those in a position to buy a home, are now in better financial shape than before,” said Redfin chief economist Daryl Fairweather. “The stimulus payments have provided many Americans with not only much-needed relief, but also extra money in their pockets. Some people have also been able to save more money than usual because they have spent less on things like travel, dining out and student loan repayments, which have been halted during the pandemic.
The average American family with children received $6,660 in stimulus funds in 2021, in the form of stimulus checks and the expanded Child Tax Credit, both part of COVID-19 relief policies. While this survey identified an overwhelming number of first-time home buyers who say stimulus money helped their down payment, most stimulus recipients used most of the funds for necessities. .
Stimulus money can help make a big dent in a down payment. The typical American home sells for $382,900 and the median down payment is about 10% of the purchase price, which equates to about $38,000 for the median priced home. Some buyers pay as little as 3%, which would amount to just $11,500 down payment. This would be feasible for families who have received multiple payments.
Some 23% of survey respondents said the ability to save extra money during the pandemic had helped their down payment, the third most common way to accumulate money for a down payment.
Nearly 12% of the remaining respondents said they raised money for installments, including the sale of cryptocurrency investments and cash gifts from family.
Click here to view Redfin’s report on first time buyers and stimulus funds.