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Zillow: Down payments make breaking into Charlotte housing market challenging

A home for sale at 2132 Cumberland Ave. in Charlotte, on Sept. 30, 2014.
A home for sale at 2132 Cumberland Ave. in Charlotte, on Sept. 30, 2014. jsiner@charlotteobserver.com

Even though Charlotte is considered a relatively affordable housing market, saving for a down payment in the area remains difficult for many first-time homeowners because rents are high and home prices are rising.

Those buying homes in Charlotte who opt to put 20 percent down can expect to pay $31,480 on a median-priced home, according to a third-quarter affordability report Wednesday from real estate data firm Zillow. That’s assuming a 30-year, fixed-rate mortgage at prevailing mortgage rates.

Not all would-be homeowners need to put down a full 20 percent, however, and a slew of other mortgage products exist to help buyers with down payments, such as veterans’ home loans.

Homeowners in Charlotte pay an average of 13 percent of their monthly incomes on mortgage payments, while renters here pay almost 27 percent of their monthly incomes on rent.

Nationally, homeowners pay 15 percent of their monthly incomes on a mortgage payment and renters pay over 30 percent of their monthly income on housing. Zillow said the national average 20 percent down payment on a median-priced home is $36,500.

First-time homebuyers, which include a lot of millennials, Zillow said, often end up turning to other ways to cover a down payment. In 2014, 13 percent of home purchases were made using a loan or gift from friends or family for the down payment.

“Unfortunately, many current renters aren’t able to realize the savings that come with homeownership because as home values and rents keep rising, it’s getting increasingly difficult to clear the down payment hurdle,” Zillow Chief Economist Svenja Gudell said in a statement.

The median price of a home in the Charlotte area is $157,400, a rise of 3.8 percent from a year ago, Zillow said. Nationally, the median price is $182,500, up 3.7 percent from a year ago.

Over the year, rental affordability worsened in 28 of the 35 largest metro areas, while mortgage affordability worsened in 18 of them, Zillow said.

Katherine Peralta: 704-358-5079, @katieperalta

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