US Median Existing-Home Down Payment Up 24.1% Year-Over-Year in February

On Friday, Redfin reported that based on its analysis of county records across 40 of the most populous US metropolitan areas going back through 2011, the median down payment for homebuyers was $55,640 in February.

Redfin says that’s up 24.1% from $44,850 a year earlier—the largest annual increase in percentage terms since April 2022. The typical homebuyer’s down payment last month was equal to 15% of the purchase price, up from 10% a year earlier.

US home prices rose 6.6% year-over-year, which is part of the reason down payments increased; a higher home price naturally leads to a higher down payment because the down payment is a percentage of the home price. But elevated housing costs (from both high prices and high mortgage rates) are also incentivizing buyers to make larger down payments.

A larger down payment means a smaller total loan amount, and a smaller loan amount means smaller monthly interest payments, Redfin explained. For example, a buyer who purchases today’s median-priced home ($374,500) and puts 15% down would have a monthly payment of $2,836 at the current 6.79% mortgage rate. A buyer who puts 10% down on that same home with that same rate would have a monthly payment of $2,968. That’s $132 more per month, which adds up over the course of a mortgage.

Mortgage rates are down from their October peak of roughly 8% but are still more than double the all-time low hit during the pandemic.

Over one-third (34.5%) of home purchases in February were made with all cash, up from 33.4% a year earlier, Redfin highlighted. That’s just shy of the 34.8% decade-high hit in November and isn’t far below the record high of 38% hit in 2013. Redfin defines an all-cash purchase as a home purchase with no mortgage loan information on the deed.