The typical homebuyer’s down payment in April was $62,468, according to a new data report from Redfin (NASDAQ: RDFN). This is a roughly 1% year-over-year drop and the first annual decline since the summer of 2023.
In percentage terms, the typical homebuyer puts down 15% of the purchase price, barely unchanged from the 15.1% recorded one year earlier. The median down payment has been around 15% for the last four years – prior to the pandemic, the typical down payment was around 10%.
Down payment percentages were highest in three California metros: San Francisco, Anaheim and San Jose, all places where the typical homebuyer put down 25% of the purchase price. They were lowest in Virginia Beach, Virginia (1.8%), Detroit (5%) and Jacksonville, Florida (5.4%).
Redfin attributed the drop in down payment levels to a slightly higher share of homebuyers using FHA and VA loans, which require lower down payments – 15.3% mortgaged sales used an FHA loan in April while 7.2% used VA loans. Just under one in three (30.7%) home sales were all cash in April.
Also, many buyers are acquiring less expensive homes due to current affordability challenges in the housing market.
“The buyers who are moving forward today are being very careful with their finances because, with housing costs near record highs, they’re typically spending a big portion of their paycheck to buy a home. I’m seeing an uptick in first-time buyers looking for starter homes,” said Fernanda Kriese, a Redfin Premier agent in Las Vegas. “Combine that with concerns about layoffs and a potential recession, and people are doing things like cross-comparing mortgage origination fees, shopping around for lenders, and looking into down payment assistance.”
