While there are signs that the overheated housing market is finally starting to cool down, home prices are still significantly higher in many parts of the country than before the pandemic. One of the side effects of these higher home prices is higher down payments.
To illustrate high down payments, LendingTree analyzed data from more than 960,000 users of its platform who lived in one of the nation’s 50 largest metros and were offered a 30-year, fixed-rate mortgage from January 1 to October 10.
The online lending marketplace found that home buyers across the nation’s 50 largest metros are putting tens of thousands of dollars, on average, toward their down payments. Even in areas where household incomes and loan amounts are relatively low, five-figure down payments are common.
A down payment on a home across the nation’s 50 largest metros averages $62,611. For comparison, that amount is 35.3% higher than when LendingTree last published this study in September 2021, when the average down payment across the nation’s 50 largest metros was $46,283. While average down payments can vary significantly by location, no metro featured in the study’s 2022 update has an average of less than $38,000.
California is home to the three metros where down payments are highest — San Jose, San Francisco and Los Angeles. The average down payment in San Jose is $142,006. In San Francisco and Los Angeles, those figures are $131,631 and $104,749, respectively. These are the only metros in our study where average down payments top $100,000.
Oklahoma City, St. Louis and Virginia Beach, Virginia are the metros with the lowest down payments. Down payments in these metros average $38,169, $40,113 and $40,530, respectively.
Across the nation’s 50 largest metros, the average down payment on a home equates to 58.3% of that area’s average yearly household income.
Down payments are the most affordable relative to income in Hartford, Connecticut; St. Louis; and Virginia Beach. Across the three metros, home buyers put 43.5% of their area’s average annual household income toward a down payment.
Los Angeles, San Diego and San Francisco are the metros where down payments are least affordable relative to income. Across the three metros, home buyers put 83.4% of their area’s average annual household income toward a down payment.
Metros with the highest average down payments
No. 1: San Jose, California
- Average down payment: $142,006
- Average mortgage amount: $636,091
- Average annual household income: $195,284
- Average down payment as a percentage of average household income: 72.7%
No. 2: San Francisco
- Average down payment: $131,631
- Average mortgage amount: $593,860
- Average annual household income: $167,674
- Average down payment as a percentage of average household income: 78.5%
No. 3: Los Angeles
- Average down payment: $104,749
- Average mortgage amount: $535,268
- Average annual household income: $115,845
- Average down payment as a percentage of average household income: 90.4%
Metros with the lowest average down payments
No. 1: Oklahoma City
- Average down payment: $38,169
- Average mortgage amount: $252,495
- Average annual household income: $82,109
- Average down payment as a percentage of average household income: 46.5%
No. 2: St. Louis
- Average down payment: $40,113
- Average mortgage amount: $248,228
- Average annual household income: $96,061
- Average down payment as a percentage of average household income: 41.8%
No. 3: Virginia Beach, Virginia
- Average down payment: $40,530
- Average mortgage amount: $287,146
- Average annual household income: $94,877
- Average down payment as a percentage of average household income: 42.7%
While large down payments can make buying a home more difficult for some, they can make the process easier — and potentially more affordable in the long term — for others.
Lending Tree offered these three tips for coming up with a down payment:
- Save, save, save. Generally, the more time you give yourself to save for a down payment, the better. Of course, saving can be difficult, especially with high inflation. But doing things like eating out less often or taking fewer vacations could help you build up a significant amount of money over time.
- Consider different loan options. While a 20% down payment may be ideal, various loan options require less upfront cash. For example, FHA loans require a down payment of as low as 3.5%. Keep in mind, however, that while finding a way to reduce a down payment can make it easier for someone to purchase a home, a smaller down payment will result in a higher mortgage amount and potentially even a higher interest rate. That means that a home buyer’s monthly payments could be more expensive.
- Look into down payment assistance programs. In some instances, a borrower may qualify for help from a down payment assistance program. These programs can provide grant money or other discounts that make a down payment more affordable.