In an intriguing turn of events in the housing market, the amount of money homebuyers are paying upfront has seen a dip for the first time in nearly two years.
This April, the typical down payment dropped by about 1 percent from the previous year, a report from Redfin, a prominent real estate brokerage, unveiled. This marked the first drop since June 2023.
What’s the Current Down Payment Situation?
Nowadays, the average American buying a home puts down 15 percent, which is slightly less than the 15.1 percent from last year. This minor change has reduced the typical down payment to $62,468, a 0.8 percent decrease from April 2024.
Despite the decrease, it’s important to recognize that down payments represent a significant portion of the home buying costs, which have been on the rise across the country.
This includes not just down payments but also mortgages, home insurance, and property taxes. While down payments hovered around 10 percent before the pandemic, they've averaged 15 percent for the past four years, only dipping briefly in early 2023.
Why This Sudden Drop in Down Payments?
Contrary to the past, home prices didn’t drop this year. In fact, the median sale price for houses actually went up by 1.4 percent in April compared to the same time last year, Redfin reports.
This contrasts significantly with the 4 percent year-over-year increase seen in April 2024, indicating a slow down in the price growth rate.
The slower growth rate in housing prices, among other factors, is contributing to the decreased down payments. Notably, a significant portion of buyers (30.7 percent) are bypassing down payments altogether, opting instead to pay in cash.
Additionally, there’s been a slight uptick in buyers utilizing Federal Housing Administration (FHA) and Veterans Affairs (VA) loans, which tend to require lower down payments.
This April, 15.3 percent of mortgaged purchases utilized FHA loans, an increase from 14.2 percent the year before. Similarly, VA loans saw an increase from 6.4 to 7.2 percent.
This trend likely indicates that more buyers are opting for less expensive homes, thus needing to put down less money up front, according to Redfin. This shift may be influenced by buyers becoming more budget-conscious due to rising housing costs and economic uncertainty.
Where Down Payments Stand Across the Country
In April 2025, the largest down payments were observed in California — notably in San Francisco, Anaheim, and San Jose. Homebuyers in these cities put down 25 percent of their property’s purchase price.
On the other end of the spectrum, Virginia Beach, Detroit, and Jacksonville reported the lowest down payments, indicating a diverse and changing landscape in the US housing market.
-
Read about: New HUD Proposal Plans Time Limits and Work Requirements for Rental Assistance
