Down payment percentages stay elevated due to higher prices

The typical down payment made by home purchasers during the third quarter increased by $500 over the previous fiscal period, with the average share remaining near 14.4% of the price, Realtor.com said.

Compared to last year's third quarter, the dollar amount of $30,400 was down by $100.

While it is normal for the down payment share to increase as the calendar year progresses, the level of change was below that of 2024. House price movements were a likely contributing factor, with values pulling back slightly.

Between the first and third quarters this year, down payments rose by 0.5 percentage points and $1,500. This compared with a 0.8 percentage point increase and $4,000 for the same period in 2024.

Down payment levels have remained steady, albeit elevated as prices rise, which is a reflection of the broader environment for housing in the U.S., said Danielle Hale, chief economist at Realtor.com.

"High prices and borrowing costs continue to test affordability, keeping many potential buyers on the sidelines and slowing overall sales activity," Hale said in a press release. "Even with mortgage rates easing into the low 6% range in recent months, the combination of high prices and limited inventory has left little relief for cost-sensitive home shoppers, while increasingly concentrating homebuying among higher-income households."

Down payments have been in the area of the high-$20,000s to low-$30,000s since 2022, following a steep pandemic era increase. When compared with the third quarter of 2019, they are more than double the typical $13,900 back then.

During the six-year period, the median home sales price increased by nearly 45%.

Investment property purchasers in the third quarter averaged putting 26.7% down; in dollars, this was $84,200. The dollar amount for second homes was notably more expensive, even though the average percentage put as a down payment was just slightly higher at 26.9%. In cash terms, the average second-home down payment was $110.100.

In the first seven months of 2025, sales of homes priced over $750,000 increased nearly 6% versus the same time in 2024; lower priced sales fell by 3%, Realtor.com said.

Regional differences in down payments

Regional differences exist in the down payment homebuyers make. The average for sales in the Northeast was 18.2%, with the West at 16.3%, Midwest at 14.5% and South, 12.5%.

The down payment share nationwide is below the 20% typically required by the conforming loan secondary market for homebuyers that do not have to obtain private mortgage insurance. In 2024, over 800,000 home purchasers used private MI, U.S. Mortgage Insurers said.

Meanwhile, a cooling housing market has allowed first-time home buyers who can only put down between $10,000 and $15,000 to be better able to compete for homes, a Redfin study reported last week. 

By dollars, the Northeast's median of $62,900 was 5.6% higher than for 2024, while the Midwest rose 5.8% to $28,000, according to Realtor.com.

Down payments in the West, however, fell by 5.6% to $51,900, while in the South, the region reported a year-over-year decline of 4.4% to $22,800.

The latest Mortgage Bankers Association forecast expects the average for the 30-year fixed rate mortgage to fall to 6.4% from 6.6% in the third quarter, and remain at that level throughout the next year.

In its first detailed 2027 forecast, rates will fall in the first and second quarters of the year to 6.3% and 6.2% respectively before bouncing back up to 6.3%; in a full-year 2028 outlook, it calls for the 30-year FRM to hit 6.5%.

"As mortgage rates edge lower, we expect more variety in who can buy, and that could bring back smaller down payments," said Hannah Jones, senior economic research analyst at Realtor.com. "However, unless inventory grows meaningfully, renewed competition could put upward pressure on prices and down payments once again."