Down Payments Reach New Peak, Presenting Further Challenge for Buyers


According to research by realtor.com®, down payments on homes in the U.S. reached a new peak in Q3 2023. The average down payment is 14.7%, and the median down payment amount is $30,000. As the report notes, down payments have increased alongside high mortgage rates and low inventory. This means a challenging market for buyers and sellers.

On a local level, down payments increased in 39 out of 50 states, falling in the remaining 11. 

The highest statewide down payment increases year-over-year in Q3 2023 were found in:

  1. The District of Columbia (3.1 ppt increase, 17.8% to 20.9%)
  1. Alaska (2.7 ppt increase, 9.5% to 12.2%)
  1. Montana (2.7 ppt increase, 18.3% to 21%)
  1. Connecticut (2.6 ppt increase, 14% to 16.6%)
  1. Rhode Island (2.5 ppt, 14.1% to 16.6%)

The states where down payments (measured as %) declined included:

  1. Utah (-0.8 ppt decrease, 17.2% to 16.4%)
  1. Texas (-0.4 ppt decrease, 12.6% to 12.2%)
  1. Arizona (-0.3 ppt decrease, 15.7% to 15.4%)
  1. Idaho (-0.1 ppt decrease, 20.3% to 20.2%)

Expert takeaways:

According to realtor.com® Sr. Economic Research Analyst Hannah Jones: “With many homeowners opting to stay put rather than list their homes for sales amid elevated mortgage rates, buyers faced limited for-sale inventory and more competition, which led many to make higher down payments to help win multiple-bid scenarios. High mortgage rates also drove buyers to consider larger down payments with hopes of minimizing the size of their monthly mortgage loan payment at today’s elevated rates.”

Realtor.com® Chief Economist Danielle Hale also commented: As long as demand continues to outmatch supply, the housing market will stay competitive, and down payments are likely to remain elevated. Furthermore, tapping into existing savings or home equity to put a larger amount down on a home may also enable shoppers to minimize the sting of higher mortgage rates. Shoppers looking to navigate these trends may find that markets in the Midwest, South and secondary markets in the Northeast offer the most affordability and opportunity to achieve homeownership.”

For the full report, click here.





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