2025-03-06
More often than not nowadays, buying a house means putting down a bigger chunk of cash upfront. Recent data highlights a significant rise in how much buyers are needing to pay as a down payment to secure their new homes.
In the recent tide of climbing house prices and interest rates peeking around 7%, a report reveals buyers are having to reach deeper into their savings.
Comparing numbers from the end of last year with the year before, there’s a notable hike both in the dollar amount and percentage of the purchase price buyers are coughing up upfront.
A look into the numbers by Redfin shows the new average down payment stands at $63,188. This figure is up by 7.5% from the previous year when buyers were typically laying down about $58,800.
When you break it down by percentages, this means buyers are now putting down a bit over 16% of the house’s sale price, up from the 15% standard seen a year prior.
It used to be that a 10% down payment was the norm before the pandemic. But the housing market has seen dramatic changes since, driven by soaring house prices and rising mortgage rates.
The average price for a house in December hit $428,000, marking a 6% rise from the previous year, and a significant number of buyers—almost a third—last year chose to pay in cash.
Saving up for a larger down payment is becoming a tougher hill to climb for many Americans, pushing the dream of homeownership further away. It also explains why the age of first-time homebuyers has nudged up to nearly 40 years old.
While some experts remain hopeful that the rapid increase in home prices might slow down, it’s not looking to reverse anytime soon. With supply still not meeting demand in many areas, buyers are left with little choice but to pay more. However, some areas are seeing shifts that might give buyers more room to negotiate.
Check out: Top 5 Loan Options for First-Time Homebuyers in 2025
The size of down payments can vary greatly depending on where you're buying. In California, for example, down payments are heftier, with buyers in cities like San Francisco, Anaheim, and San Jose putting down 26.4% and 25% respectively. On the flip side, places like Virginia Beach, Virginia saw the lowest with typical down payments of just 3%, with Detroit and Baltimore also under 10%.
Redfin’s senior economist, Sheharyar Bokhari, highlights that in some cases, going lower on a down payment might work out better financially for buyers, allowing them to save money for future investments or home improvements.
As the housing market continues to evolve, understanding these trends and how they affect your home buying process is more crucial than ever.
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Previous article: The Age of First-Time Homebuyers is Reaching New Heights
Home Down Payments Are Increasing and Here’s What It Means for Buyers
More often than not nowadays, buying a house means putting down a bigger chunk of cash upfront. Recent data highlights a significant rise in how much buyers are needing to pay as a down payment to secure their new homes.
In the recent tide of climbing house prices and interest rates peeking around 7%, a report reveals buyers are having to reach deeper into their savings.
Comparing numbers from the end of last year with the year before, there’s a notable hike both in the dollar amount and percentage of the purchase price buyers are coughing up upfront.
A look into the numbers by Redfin shows the new average down payment stands at $63,188. This figure is up by 7.5% from the previous year when buyers were typically laying down about $58,800.
When you break it down by percentages, this means buyers are now putting down a bit over 16% of the house’s sale price, up from the 15% standard seen a year prior.
It used to be that a 10% down payment was the norm before the pandemic. But the housing market has seen dramatic changes since, driven by soaring house prices and rising mortgage rates.
The average price for a house in December hit $428,000, marking a 6% rise from the previous year, and a significant number of buyers—almost a third—last year chose to pay in cash.
Saving up for a larger down payment is becoming a tougher hill to climb for many Americans, pushing the dream of homeownership further away. It also explains why the age of first-time homebuyers has nudged up to nearly 40 years old.
While some experts remain hopeful that the rapid increase in home prices might slow down, it’s not looking to reverse anytime soon. With supply still not meeting demand in many areas, buyers are left with little choice but to pay more. However, some areas are seeing shifts that might give buyers more room to negotiate.
Check out: Top 5 Loan Options for First-Time Homebuyers in 2025
The size of down payments can vary greatly depending on where you're buying. In California, for example, down payments are heftier, with buyers in cities like San Francisco, Anaheim, and San Jose putting down 26.4% and 25% respectively. On the flip side, places like Virginia Beach, Virginia saw the lowest with typical down payments of just 3%, with Detroit and Baltimore also under 10%.
Redfin’s senior economist, Sheharyar Bokhari, highlights that in some cases, going lower on a down payment might work out better financially for buyers, allowing them to save money for future investments or home improvements.
As the housing market continues to evolve, understanding these trends and how they affect your home buying process is more crucial than ever.
-
Previous article: The Age of First-Time Homebuyers is Reaching New Heights
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