The Washington PostDemocracy Dies in Darkness

More evidence of why trying to save 20 percent on a home down payment isn’t realistic

A new report says it may take D.C. home buyers more than three decades to save for a 20 percent down payment. (iStock)

One of the biggest misconceptions associated with buying a home is that you need a down payment of 20 percent of the home price. The median down payment for buyers under age 37, a group that typically includes a majority of first-time buyers, was just 7 percent last year, according to the National Association of Realtors.

One reason more buyers choose to make a smaller down payment is that it can take years to save enough for a larger down payment. In the meantime, home prices are rising, pushing homeownership further out of reach.

A new low down-payment option for first-time home buyers

It would take an average of 36 years for someone earning the median income in the District to save for a 20 percent down payment on a median-priced house, according to a recent report from U.S. Mortgage Insurers (USMI), an association representing private mortgage insurance companies. Only California residents would face a longer period — 37 years — to save for a 20 percent down payment.

In the state with the shortest time period to save 20 percent — Indiana — residents would need 12 years. The study found that it would take Maryland residents 18 years to save for a 20 percent down payment and Virginia residents 20 years.

Home buyers who make a down payment of less than 20 percent need to pay private mortgage insurance (PMI), which protects their lenders in case they default on the loan but adds to the monthly housing costs for buyers. Fifty-six percent of buyers who paid PMI in 2017 were first-time buyers, and more than 40 percent had annual incomes below $75,000.

The states with the largest number of buyers purchasing a home with PMI in 2017 were Texas, California, Florida, Illinois and Michigan.

Despite the high cost of housing in the Washington region, Virginia ranked 13th on the list, Maryland 20th and the District 46th.

For the full report, visit