The median planned down payment to buy a new house has risen sharply since 2021, affordability varies drastically from state to state, according to a LendingTree analysis of more than 1 million mortgage purchase inquiries on its platform.
It’s not just dollar amounts increasing, either. LendingTree said that planned down payments now account for larger shares of both loan amounts and borrowers’ incomes.
LendingTree said that one of the most striking findings is that potential buyers could need more than a decade to save enough to match the median down payment.
LendingTree noted that down payments are rising faster than incomes. The median down payment people intend to make on a mortgage purchase reached $45,000 in 2024 — up from an inflation-adjusted $37,624 in 2021. The $45,000 total equals more than six months of income for the median household, almost a full month more than was needed three years before.
According to LendingTree, here are the Top 10 states:
California is the least affordable state for down payments. Buyers there need 10.3 months of income, on average, to cover a median down payment in 2024 — the highest in the nation. Massachusetts and Washington follow at 9.7 months and 9.1 months, respectively.
West Virginia is the most affordable. Homebuyers there need 4.4 months of income, on average, to afford the median down payment — less than half the burden faced by buyers in California. Iowa is next at 4.5 months, and Missouri follows at 4.8 months.
Median Down Payment Rose Sharply from 2021 to 2024
LendingTree noted that down payments are increasing not just in dollars but as a share of the loan amount. It said that the median down payment leaped from 10% to 15% of the loan amount from 2021 to 2024. In dollars, LendingTree said the median down payment increased 19.6% in just three years.
Saving for a median down payment could take more than a decade. With a typical household savings rate of 5% from income, LendingTree said the average homebuyer in the United States would need 10.7 years to save for a median down payment in 2024, compared with 9.3 years in 2021.
A down payment on a mortgage matters greatly for a homebuyer. It can dramatically reduce the amount of interest you pay over the life of the loan, and it can also shrink the monthly payment by ensuring the homebuyer does not have to pay private mortgage insurance (PMI).
The post Down Payments: Here’s How Much Cash Buyers Need in Every State first appeared on The MortgagePoint.
