The typical down payment for a house has doubled in just 3 years

The median advance payment on homes in major US markets has doubled over the past three years, far outpacing the rise in home prices themselves.

In May and June 2022, the median down payment for the purchase of a home by buyers with mortgages peaked at around $66,000, according to a new analysis of 40 metropolitan areas of the real estate brokerage Redfin.

Three years earlier, in the summer of 2019 before the pandemic-era housing boom, the median down payment was just under $33,000.

In other words, the typical down payment has increased by 100% over this three-year period. Meanwhile, house prices were also skyrocketing, but not as rapidly, rising about 38% in the three years ending July 2022, Redfin reported.

Why installments have increased so much

For most of the pandemic, the housing market has sizzled. The offers arrived quickly, bidding wars were commonhomes often sold for above list price – and the amounts of the installments have climbed more and more.

When sellers have multiple offers, a large down payment can signal that the buyer is serious and has the means to complete the purchase, according to Redfin. As the the housing market has become more competitivethe typical down payment skyrocketed as buyers put in more money to increase their chances of closing the deal.

Before the pandemic, the typical down payment was around 10% of the purchase price of a home. That percentage peaked at 18% in May and settled at 15% in July, according to Redfin. experts came to similar conclusions in a May Analysisreporting that down payments rose faster than home prices from the first quarter of 2020 to the first quarter of 2022. Some buyers were able to make larger down payments as they saved on things like entertainment and travel during the pandemic, while also receiving money from stimulus check programs.

Over the past year, installments have grown at the fastest rate in Nashville (39.7%), Newark, NJ (36.4%) and New York (34.8%), reports Redfin. Down payments fell or were flat in seven metros, most of which are California markets where home prices are falling faster than in other parts of the country.

What’s next for house prices (and down payments)

The increase in down payments helps illustrate how difficult it has become for buyers to afford a home. For Americans who live paycheck to paycheck, come with a deposit is often the biggest obstacle to to buy a house.

Mortgage rates have soared in recent months, pushing buyers’ prices out of the market as the cost of borrowing to buy a home increases. House prices are now falling at the fastest pace since the 2008 financial crisis, but prices are still rising year on year. Combine high house prices and larger down payments with mortgage rates and tight housing supply in many markets, and you get a dire situation for buyers.

For buyers looking for a home right now, the good news is that prices are coming down (slightly) and there’s less competition. So the days of having to pay a disproportionate down payment could be coming to an end, according to Redfin.

The median down payment fell to $62,500 in July 2022 from $66,000 in June, according to Redfin, and further declines are likely.

“Homebuyers no longer need to make huge down payments because they are much less likely to encounter bidding wars now that so many Americans have pulled out of the market, said Sheharyar Bokhari, senior economist at Redfin, in the report. “While installments will likely remain elevated above pre-pandemic levels, they will likely decline somewhat in the near term.”

Money movements

Every Saturday, Money’s real estate editor, Sam Sharf, dives deep into the world of real estate, providing a fresh take on the latest housing news for homeowners, buyers and dreamers.


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