Saving for a Down Payment in Chicago? It’ll Take You Longer if You’re Single
How long would it take you to save for a down payment on a typical Chicago condominium or single-family home? According to new research from Zillow, it’ll take you a lot longer if you’re single.
The Chicago Tribune recently ran a feature story looking at Zillow’s results. It found that a single buyer in Chicago would have to save on average 10 years to come up with enough money for a down payment of 20 percent for a Chicago home.
But couples who are purchasing a home in the Chicago market together? The Tribune reports that it takes a couple an average of four years to save up that same 20 percent down payment.
These trends assume that buyers are saving 10 percent of their income every year. Buyers can cut down the years it takes to save for a down payment by saving more each year, of course. The research also assumes that buyers are putting down 20 percent of their home’s final purchase price. There’s no rule, though, that says buyers must put down that much.
In fact, smaller down payments are far more common today. It’s possible for buyers to qualify for down payments as low as 3 percent of a home’s price with programs backed by Fannie Mae and Freddie Mac. Buyers can also qualify for down payments of just 3.5 percent of a home’s final price with FHA loans.
In general, it’s far from rare for buyers, even those saving for homes in Chicago, to provide down payments of 5 percent or less.
The point, though, remains that it does take single buyers longer to save up for their down payments. Why is that? It’s expensive to live on your own. You have to cover your health insurance and taxes on your own. When you’re part of a couple? You’re splitting more costs and you’re often bringing more income into a household. That combination makes it easier to save faster for a down payment.