How much Columbus homebuyers need to save for a down payment

COLUMBUS, Ohio (WCMH) — With real estate prices surging, saving for a down payment might seem unattainable; however, the results of a new study and advice from a central Ohio expert can help outline a path for first-time buyers to receive the benefits of homeownership.

According to Jamie M. Curtis of Street Sotheby's International Realty, renters in Columbus are seeing a “trifecta of pressures.”

“They are being forced to absorb higher rents while trying to save to buy a home that keeps increasing in value every year, along with higher interest rates,” Curtis said. “The long-term benefits of owning real estate still outweigh the pressure at the outset, but I do see the issue from every angle. It’s hard for renters to talk themselves into home ownership right now.”

In a new study by MutualFund.com to afford a median-priced home in Columbus, prospective homeowners must save $7,415.22 per year, or approximately $20.32 per day, over the next five years. This estimate is based on a 15% down payment for a home valued at $247,174, which equates to a required down payment of $37,076.10.

While saving nearly $40,000 for a 15% down payment might be ideal, it is not mandatory to purchase a home. Putting a nice chunk of money down can ease what a buyer must pay monthly, but choosing a mortgage with a smaller down payment can help reserve cash for repair and maintenance expenses.

“First-home buyers should plan to save for a down payment of 5-20%, or more if they need to achieve a lower monthly mortgage payment,” Curtis said. “While some buyers can qualify for an FHA loan with as low as 3.5% down, this means a higher monthly payment that may still be out of budget.”

The other part of the study's equation that could be an obstacle for house hunters is the expectation of what is available for the median home price in the city and surrounding areas.

“I have a lot of clients who relocate from larger markets, and they think central Ohio is more affordable than it is,” Curtis said. “They are always surprised by home values, especially in suburbs with strong public schools. It’s not just locals or renters that are getting sticker shock.”

Looking for homes that need cosmetic repairs or updates could pay off in the long run.

“Homeowners can realize long-term appreciation, tax advantages, and will be paying down a mortgage that can someday be refinanced into a lower payment,” Curtis said. “Renters will never be able to lower their rent payment on the same property.”

Ultimately, Curtis advises a simpler formula than saving $20.32 daily for five years to enter the real estate market.

“Just save as much as possible and look for properties below your target budget,” Curtis said.