Your Tax Refund and Stimulus Savings May Help You Achieve Homeownership This Year

Your Tax Refund and Stimulus Savings May Help You Achieve Homeownership This Year | Simplifying The Market

If youโ€™re planning to buy a home this year, saving for a down payment is one of the most important steps in the process. One of the best ways to jumpstart your savings is by starting with the help of your tax refund.

Using data from the Internal Revenue Service (IRS), itโ€™s estimated that Americans canย expectย an average refund ofย $2,925 when filing their taxes this year. The map belowย showsย the average anticipated tax refund by state:Your Tax Refund and Stimulus Savings May Help You Achieve Homeownership This Year | Simplifying The MarketThanks to programs from theย Federal Housing Authority, Freddie Mac,ย andย Fannie Mae,ย many first-time buyers can purchase a home with as little as 3% down. In addition, Veterans Affairs Loansย allow manyย veteransย to put 0% down. You may have heard the common myth that you need to put 20% down when you buy a home, but thankfully for most homebuyers, aย 20% down payment isnโ€™t actually required. Itโ€™s important to work with your real estate professional and your lender to understand all of your options.

How can your tax refund help?

If youโ€™re a first-time buyer, your tax refund may cover more of a down payment than you realize.

If you take into account theย median home sale priceย by state, the map below shows the percentage of a 3% down payment thatโ€™s covered by the average anticipated tax refund:Your Tax Refund and Stimulus Savings May Help You Achieve Homeownership This Year | Simplifying The MarketThe darker the blue, the closer your tax refund gets you to homeownership when you qualify for one of the low down payment programs.ย Maybe this is the year to plan ahead and put your tax refund toward the down payment on a home.

Not enough money from your tax return?ย 

A recent paper from the National Bureau of Economic Research found that, of the households that received a stimulus check last year, โ€œOne third report that they primarily saved the stimulus money.โ€ If you had the opportunity to save your Economic Impact Payments, you may consider putting that money toward your down payment or closing costs as well. Your trusted real estate professional can also advise you on the down payment assistance programs available in your area.

Bottom Line

Saving for a down payment can seem like a daunting task, but it doesnโ€™t have to be. This year, your tax refund and your stimulus savings could add up big when it comes to reaching your homeownership goals.

Content previously posted on Keeping Current Matters

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