Typical Home Down Payment Reaches Record $68K
Nearly three in five homebuyers put down more than 10% of the purchase price.
One of the campaign promises Democratic presidential candidate Kamala Harris has made if she is elected is to provide $25,000 in assistance to qualifying homebuyers to help them come up with the downpayment for their first home. Generous as the proposal sounds, it may not be sufficient in view of a new report from Redfin that found the typical downpayment for U.S. homebuyers in June was a record $67,500.
In fact, that figure was 14.8% higher than the $58,788 price tag established just a year earlier. It marked the 12th consecutive month in which the median downpayment increased. To put the current situation in perspective, the typical homebuyer’s downpayment in June was 18.6% of the purchase price – the highest level in over a decade.
“Nearly three in five (59.4%) homebuyers put down more than 10% of the purchase price in June, up from 56.6% a year earlier,” Redfin reported. This occurred even as the median home price jumped 4% to a record $442,525 in June 2024 compared to June 2023.
The report attributed the spike in down payments to three causes. Higher home prices mean higher down payments. High mortgage rates encourage buyers to borrow less and put down more money upfront. Existing homeowners who sell can afford to put profits from the sale into bigger down payments when they buy a second home.
Nationwide 30.7% of homes were bought with cash, the report found, though it said that level may fall if mortgage rates do the same. All-cash purchases were most common in West Palm Beach, FL – where fully 50% of sales were paid in all cash. The practice was also more common in Riverside, CA and Detroit, MI. “All three metros see strong investor activity,” the report commented.
On the other hand, the financial squeeze on potential FHA borrowers left many out in the cold. The share of FHA loans in the housing market fell to just 13.7%. VA loans also slipped slightly to 6.7% of all mortgaged home sales. Out of every five borrowers, four took out a conventional loan.
Newark, NJ experienced the highest leap in down payments – a 51.5% jump from 82,500 in June last year to $125,000 this year. Las Vegas, Washington, DC, New Brunswick, NJ, and Nashville, TN all saw down payments soar from 30% to 40%. However, down payments fell in Jacksonville, FL, Oakland, CA, and Tampa.
As a percentage of the purchase price, San Francisco suffered the worst, with the highest median downpayment in the nation at 25.8%, closely followed by two other California cities San Jose and Anaheim. The lowest down payments occurred in Virginia Beach, Detroit, and Jacksonville.