Median-Income Homebuyers Need $127,750 Down Payment for Affordable Monthly Payments on Typical US Home, Zillow Reports

On Thursday, Zillow released a new analysis showing that to comfortably afford a typical US home, a home buyer making the median income needs to put down nearly $127,750, or 35.4%.

Zillow points out that five years ago, when mortgage rates were hovering just above 4% and the typical home was worth approximately 50% less, that home would have been affordable with no money down.

Zillow concludes that the $127,750 down payment is what a household making the median income would need to put down when purchasing a typical home—valued at about $360,000—so that the monthly mortgage payments take up no more than 30% of monthly income.

To save up $127,750, it would take a household making the median income about 12 years (assuming its members save 10% of their income each month with a 4% annual return). It’s no wonder that 43% of last year’s buyers used a gift from family or friends for at least part of their down payment, the highest share since at least 2018.

In remarks accompanying the report, Zillow Chief Economist Skylar Olsen said:

“Down payments have always been important, but even more so today. With so few available, buyers may have to wait even longer for the right home to hit the market, especially now that buyers can afford less. Mortgage rate movements during that time could make the difference between affording that home and not. Saving enough is a tall task without outside help—a gift from family or perhaps a stock windfall. To make the finances work, some folks are making a big move across the country, co-buying or buying a home with an extra room to rent out. Down payment assistance is another great resource that is too often overlooked.”