Median Down Payment for Home Buyers Hits All-Time High in 2018

According to a report published in September by ATTOM Data Solutions, the median down payment among home buyers in the U.S. hit an all-time high during the second quarter of 2018.

The nationwide median was $19,900 during the second quarter. San Jose, California topped the charts with a (mind-blowing) median down payment of $306,000. Three other California metro areas rounded out the top four, followed by Boulder, Colorado.

Home Buyer Down Payments Reach All-Time High in 2018

According to the report published last month, the median down payment for single-family home and condo purchases was $19,900 during the second quarter of 2018. That was an increase of 19% over the previous quarter, when the median was $16,750. It also marked “a new record high going back as far data is available,” said the report.

This analysis included 103 metropolitan areas across the United States. Out of those 103, the metro areas with the highest median down payments in Q2 2018 were:

  • San Jose, California ($306,000)
  • San Francisco, California ($220,000)
  • Los Angeles, California ($130,000)
  • Oxnard-Thousand Oaks-Ventura, California ($115,400)
  • Boulder, Colorado ($107,750)

The numbers in parentheses might look like home values, at first glance. But they’re actually the median down payments among home buyers during the second quarter, for each of those metros. (So yes, a typical down payment on a house in San Jose is higher than the average home value for the U.S. The word “anomaly” comes to mind.)

This report also identified another group of metro areas with median down payments of $60,000 or higher, during the second quarter. They included:

  • San Diego, California ($90,400)
  • Boston, Massachusetts ($79,925)
  • Seattle, Washington ($70,100)
  • Fort Collins, Colorado ($68,050)
  • Among others

But home buyers in these metro areas who can’t afford such a large down payment shouldn’t fret too much. In fact, depending on the kind of loan program you use, your minimum required investment could be significantly lower than the figures mentioned above.

Median and Minimum Are Two Different Things

To be clear: the numbers shown above do not represent the minimum down payment required for different mortgage programs. These are just the median figures.

By definition, the median is the midpoint for a data set. So in this case, half of all home buyers in each metro area made down payments above the median figure, while the other half put down less money than that amount.

Minimum down payments are a totally different story. For instance, borrowers who use a conventional home loan to buy a house could qualify for a down payment as low as 3% of the purchase price. Similarly, the Federal Housing Administration (FHA) loan program allows eligible borrowers to make an upfront investment as low as 3.5% of the purchase price.

So why are the median figures so much higher than these minimums? Some borrowers choose to make larger down payments, and for a couple of reasons:

  • Some do it because they want to minimize the loan amount and the size of their monthly payments.
  • They also do it to avoid paying mortgage insurance, which is usually required when the loan-to-value ratio rises above 80%.

Borrowers who make these larger upfront investments push the median and average down-payment figures higher than the minimum requirements mentioned earlier.

Conclusion: Rising home values have forced home buyers to make larger investments on their purchases, in terms of the actual dollar amount. Nationwide, the median down payment for single-family home purchases (where a mortgage loan was used) rose to $19,900 during the second quarter. That was an increase of 19% over the previous quarter. But it’s possible to make a smaller investment, as little as 3% for a conventional loan and 3.5% for FHA.