Typical Down Payments Now Top $63k

With median home prices climbing through the end of 2024 and mortgage rates near 7%, new data shows that homebuyers ended the year digging deeper into their pockets for down payments.

According to data from Redfin, the typical down payment has risen both in terms of the dollar amount people put down as well as a percentage of the purchase price compared to a year ago. (The online brokerage compared the most recently available figures, which date from December, with the same time period a year earlier.)

Both average down payment dollars and percentages are off the record highs each saw earlier this year. But as home prices continue to climb, buyers are seeking relief from high borrowing costs by putting down more money in order to keep their monthly mortgage payments lower.

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Redfin found that the typical homebuyer now puts down $63,188. In dollar terms, this is an increase of 7.5% from a year earlier, when the typical homebuyer put down $58,800. In percentage terms, that amount equals a little over 16% of the purchase price, which is an increase over the 15% buyers typically put down a year ago.

Pre-pandemic, the norm was more around 10%, but the radical transformation the housing market has undergone since then reflects a new reality of increased home prices and higher mortgage costs.

The median home price in December was $428,000, Redfin said, an increase of 6% from a year earlier, and nearly a third of buyers last year paid for their homes with cash. Having to save more has made achieving the dream of homeownership more challenging for Americans and has forced many to wait longer before they can afford to buy their first home. It's one of the reasons why the average age of first-time homebuyers has crept up to a record high of nearly 40 years old.

Housing experts have held out hope that the meteoric rise in home prices is slowing, although not reversing. With supply still falling short of demand in many major metro areas, buyers have little choice but to pay up. In other locations, though, Redfin's analysis suggests that buyers are beginning to acquire more leverage when it comes to negotiation.

Regional variations

Redfin's research found significant regional variations in down payment norms. As might be expected, California topped the list. Each of the three cities with the highest typical down payments as a percentage of the sale price hailed from the Golden State. Buyers in San Francisco typically put down 26.4% of the purchase price, while buyers in Anaheim and San Jose had typical down payments of 25%.

On the other end of the spectrum, buyers in Virginia Beach, Virginia, put down a nationwide low of 3% on the typical home purchase last year. Down payment rates in two other cities also fell below 10%, with Detroit and Baltimore coming in with 6.5% and 8.5%, respectively.

In these cases, Redfin senior economist Sheharyar Bokhari advises, coming in with a lower down payment might make more financial sense. “House hunters don’t necessarily need to break the bank for a huge down payment if it makes more financial sense to save some money for things like future home renovations or other investments,” he said in a news release.

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