Down Payments Fall From Historical Peak

The amount of money a homebuyer puts down to purchase a home hit a historic high at the end of 2024, but that sum is finally falling.

new report from Realtor.com® shows that the median down payment homebuyers laid on the closing table in the first three months of 2024 was an average of 13.6%—which translates to $26,000. That’s down from last quarter’s historical peak when the average buyer shelled out about $30,400 (14.7%).

In cold, hard cash, that equals a savings of $4,400.

This might be good news for buyers hoping to hit the spring market, as saving up for a sizable down payment can be a major hurdle for many Americans.

What’s caused down payments to fall is “perhaps a result of diminished competitiveness in the most recent quarters as housing supply rebounds,” says Realtor.com senior economic research analyst Hannah Jones. It’s also “seasonally typical for down payments to fall between the fourth quarter and the first quarter.”

To arrive at these results, the Realtor.com economic team analyzed down payment trends across the United States, individual states, and the top 150 metropolitan areas up through the first quarter of 2024, using data from Optimal Blue. The team then calculated the down payment as a percentage of the sale price by averaging the data, and as a dollar amount by taking the median.

States and metros with the highest down payments

The Pacific Coast—and California specifically—hosts some of the most expensive homes for sale in the country. So it follows that the Golden State would take the No. 1 spot when it comes to where buyers hand over the largest down payments.

“Down payments tend to be higher in high-priced areas and areas where buyers are competing with other bids for a home,” says Jones.

Homebuyers in Oxnard, CA, made the most sizable down payment in the top 150 metros, laying out a whopping 24.5% average down payment as an overall share of the median home’s purchase price. That amounts to a down payment of $168,683.

Yet when it comes to the city where buyers shell out the highest down payment in dollars, that dubious honor belongs to San Jose, CA, where buyers put down an average of $213,000, or 24.0% of the purchase price. Nestled in the heart of Silicon Valley, where Apple, Google, and Nvidia are based, it is the most expensive housing market in America, according to a Realtor.com analysis. There, the median home list price hovers around $1.46 million—and homebuyers need to earn at least $361,000 to own a home.

In a surprise twist, San Jose also nabbed another title: the largest annual decrease in down payments in the largest metros. Down payment amounts dropped by 11.9% (or $28, 779) compared with the last quarter of 2023, highlighting how down payments are falling overall.

Two other California metros rounded out the top three spots with the highest down payments in dollar amounts: Santa Barbara, which saw buyers put down an average of $206,033, and San Francisco, where buyers plunked down about $201,617 for the median house.

“With still-high prices and elevated mortgage rates, many of today’s buyers are likely either high earners or buyers using existing home equity—which remains not far off of recent highs—to purchase a new home, meaning more cash on hand to use as a down payment,” says Jones.

States and metros with the lowest down payments

Homebuyers with more modest means can head to Texas and Florida.

“The softening of the Texas and Florida housing markets means home price growth stalled and buyers likely faced less competition and more options,” explains Jones. “This impact can be seen in down payment trends.”

Buyers in the Lone Star State need to put down an average of $15,105, while home shoppers in the Sunshine State need about $27,809 down to buy a median-priced home.

The backstory of down payments falling in these states rests on the pandemic, when these two balmy states saw a massive surge in demand. That homebuying frenzy led to scarce listings and rising home prices. Now that the pandemic is over and the housing market has slowed under the weight of high mortgage rates, housing stock is up.

Indeed, Texas and Florida lay claim to 23 of the 150 largest U.S. metros, and 14 of those markets have seen down payments fall as a percentage of the purchase price.

Topping the list of shrinking down payments is Palm Bay, FL, where buyers put down about $29,000 (15%) in the first three months of 2023. That figure slipped to $17,000 (12.9%) in the first quarter of 2024.

Ocala and Naples rounded out the top three Florida markets with falling down payments. The typical down payment is $8,259 (down 51.3%) in Ocala and $67,895 (down 14.5%) in Naples.

“Buyers looking to purchase in areas with falling down payments are likely to see either more affordable homes or less competition from other buyers,” says Jones.

Is a smaller down payment better for the buyer?

While you might be able to put down less in 2024 to buy a home, it doesn’t necessarily mean you should if you have extra cash lying around.

Mortgage rates have more than doubled since the height of the pandemic. So many buyers are choosing to put more down in an effort to minimize their interest payments by taking out a smaller loan.

“This does not mean you have to pay more as a down payment necessarily,” says Jones. “But you might find it advantageous to do so as it serves as equity in your home right off the bat, minimize interest payments, and may benefit your case in a multiple-bid scenario.”

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