San Diego County homebuyers spend an average of $ 85,714 on down payments to get into a home – the third highest in the country.
A new study from LendingTree says the average down payment in the US is $ 46,283. Many California markets far exceed this. San Jose has the highest average at $ 115,138 and San Francisco is second at $ 103,865.
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The high numbers reflect rising home prices across the country, but also the fact that most buyers are sticking to at least a 10-20% drop on mortgages. This is generally considered a good sign for the economy, given that much of 2008 the housing collapse was linked to “no-down mortgages”, which required no down payment.
LendingTree used the mortgages offered to users of its website from January 1 to August 25 and the median household income according to the US census. He went deeper into the data to look at how much people were spending relative to their household income.
He said buyers in the San Diego metro area (which includes all of San Diego County) were spending 102% of their family income on a down payment. This percentage is the second highest in the country behind the Los Angeles subway, where shoppers spend 108% of their household income on down payments.
Despite much higher home prices, buyers of California’s two most expensive subways are spending less money on down payments due to higher incomes. In San José, buyers spend 88% of their annual income on down payments, and 90% in San Francisco.
Down payments are typically lower than the median annual household income in a metropolitan area, wrote Jacob Channel, senior economic analyst at LendingTree. He wrote that while there are programs that allow for smaller down payments – such as Federal Housing Administration or VA loans – a lower down payment could make finances difficult in the future.
“Keep in mind, however, that your loan amount and the interest rate are likely to be higher if you put less money on your home, which could make monthly payments more difficult to pay. “, he wrote.
For example, if a San Diego buyer bought a house at the July median price of $ 730,500 with a 3.5% FHA loan, the monthly payment would be around $ 4,244. This number assumes a loan term of 30 years and includes other payments, including mortgage insurance.
However, if a buyer in San Diego bought a home at the same price with 20% down payment using a conventional 30-year fixed rate loan, that comes down to a payment of around $ 3,000 per month.
LendingTree said the lowest average down payment on the 50 subways surveyed was in Oklahoma City at $ 28,267. In Oklahoma City, buyers spend about 47% of their annual family income on down payments.
Other subways with low average down payments: New Orleans at $ 29,371, St. Louis at $ 29,958 and Louisville, Kentucky at $ 31,445.
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Average down payment by metro and down payment as a percentage of median household income
San José, California: $ 115,138 (88%)
San Francisco, CA: $ 103,016 (90%)
San Diego, California: $ 85,714 (102%)
Los Angeles, California: $ 83,987 (108%)
Seattle, WA: $ 79,561 (85%)
New York, NY: $ 62,436 (75%)
Boston, Massachusetts: $ 60,692 (64%)
Washington, DC: $ 57,570 (54%)
Denver, CO: $ 55,559 (65%)
Sacramento, California: $ 52,877 (69%)