I was reading an article earlier stating that only 34% of all buyers in July were first-time home buyers. The author of the article seemed surprised by this statistic but I don’t seem to be phased too much. According to the National Association of Realtors, first-time buyers usually account for about 40% of the homes purchased in any given month. Our number seems to be low this month, but we’re actually higher than we were a year ago. With extremely low interest rates and low prices, you would think that many home buyers, even over 50% would be first-timers. This is not the case and I’ll tell you why. Many first-time home buyers have already purchased a home. Remember that $8,000 tax credit for first-time home buyers? Many people bought their first home during this time because that was a deal too good to pass up. Another reason many have yet to purchase is the simple fact of purchasing power. A huge amount of younger people are significantly underemployed. What types of homes can you purchase with a $40,000 per year salary? Not many, and the ones you can afford need heavy repairs. Regardless of low prices and low rates, if you can’t afford a home or worse yet, you can’t qualify for a loan, you will not be purchasing a home as a first-time home buyer. One of the most important factors, I believe it is the single most important, is the ability to come up with a quality down payment. A large down payment can solve many problems and also ease the tension of being a homeowner, but it also comes with its own set of problems. We don’t want to be cash poor but this can occur quickly, especially with the loss of a job. I always recommend putting as much as you can down, but you still need to have a significant reserve fund just in case. Many people will dispute this, especially with low down payment options from FHA insured lenders, but it’s hard to argue with a small mortgage payment.