The Rising Cost of Homeownership: Typical Down Payment Surges 15% in the Past Year

Record High Down Payments for Homebuyers

Buyers in the market for a new home are digging deeper into their cash reserves than ever before.

Typical Down Payment Reaches a New High

The typical down payment hit a record high of $67,500 in June, according to a new Redfin report. That’s up nearly 15% from last year, when the average down payment was $58,788.

Homebuyers Are Relying on Larger Amounts of Cash

Mortgage rates have been hovering close to 7% for most of the year, pushing monthly payments higher as home prices remain elevated. Now, homebuyers are relying on larger amounts of cash upfront to reduce how much they have to borrow and ultimately lower their monthly mortgage payments, Annie Foushee, a Denver-based Redfin agent wrote in the report. The typical down payment now covers more than 18% of a home’s purchase price.

Record Down Payments Improve Housing Affordability

The housing market has been difficult over the past few years thanks to soaring home prices and high mortgage rates.

Housing Market Challenges

According to Redfin, the median sales price in June was $442,525, while Freddie Mac’s interest rate on a 30-year fixed-rate loan averaged 6.92%. At that price and rate, the monthly mortgage payment was more than $2,700.

Gen Z and Millennial Buyers Relying on Family Help

For repeat buyers or homeowners planning to buy a new property, financing a down payment is more accessible. Increased home prices have led to a record amount of equity, which homeowners can tap through a home sale or an equity loan. With more cash available, buyers can take out a smaller mortgage and ideally save on interest over time.

Metros with the Largest Down Payment Increases

These are cities with the most significant increase in median down payment, according to Redfin’s data.

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