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Overcoming Down Payment Barriers

HousingSaving up to make a downpayment on a home in a big metro may not be a tough proposition. According to a study by realtor.com [1], it's all about how you look at the task. The study [2] recommended that first-time homebuyers could look at saving small amounts daily to reach their downpayment goal.

To find the ideal amount that buyers would need to save to afford a downpayment in the country's 11 largest metros, realtor.com looked at the median home listing price in May in these areas. It also analyzed the average percentage that buyers in those areas put down to buy a home. The researchers then calculated how much potential buyers needed to save each day to reach that amount over five and 10 years.

The study indicated that to buy a home in New York, a buyer would need to save $25.04 per day for five years. The amount to be saved over a span of 1o years would be $12.52 per day to afford a down payment in the Big Apple.

In Los Angeles, the study indicated that condos were an affordable housing option especially if buyers could save around $44 over a span of five years to afford down payment. If they were willing to wait for 10 years, then they would need to save approximately half that amount.

In Chicago, where the median price for a home is around $312,098, a first-time buyer would need to save approximately $10.72 over a span of five years to afford a 12.7% down payment. Homes in Dallas, which featured at No.4 among the top 11 metros, are priced at $350,000 on average. To afford down payment on one of those sprawling Texas homes here, a buyer would need to save at least $10.65 per day over five years.

Houston, another Texas city, rounded off the top 5 of the 11 metros in the study. The median price of homes in this city stood at $324,925. To afford the average down payment of 11.7%, a buyer would need to save approximately $8 per day over a span of five years.

Other cities in the realtor.com study included Philadelphia, Washington, D.C., Miami, Atlanta, Boston, and San Francisco.

In fact, a buyer intending to purchase a home in San Francisco would need to save the most amount of money compared to the other cities, according to the study. With home prices in the Golden Gate City averaging $954,000, one would need to save at least around $94 per day over five years to afford a 21.7% down payment in this city.