What Is the Median Down Payment by State in 2024?
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The housing market has seen drastic price increases in recent years. From 2020 to 2021, the median sale price of a home grew 14.63%, according to data from Redfin. That growth has slowed but has yet to stop. From 2022 to 2023, the median sale price increased 3.81%.
If you’re planning to buy and move to a new home this year, you may be wondering how these price increases have impacted down payments and how down payments compare from state to state. The This Old House Reviews Team analyzed median home sale data from November 2023 for single-family homes. We assumed a 15% median down payment based on information from the National Association of Realtors (NAR). You can refer to our methodology to learn more about our data collection and analysis.
Key Findings
The state with the highest median down payment is Hawaii, with a median down payment of $134,850. Iowa has the lowest median down payment, with a median down payment of $33,150, more than four times less than Hawaii.
Buffalo, New York, has a median down payment of $36,750, nearly half the median for New York State ($68,850) and nearly three times less than New York City ($109,500).
Pittsburgh, Cleveland, Detroit, and St. Louis have lower median down payments than their respective states.
Nineteen states and Washington, D.C., have a higher median down payment than the national median down payment of $63,900.
Median Down Payment on a House by State
The team at This Old House Reviews analyzed November 2023 median home sale price data from Redfin for each state and assumed a 15% down payment for first-time and repeat home buyers based on NAR data. We used the same sources to determine median down payments for metropolitan areas, assuming a 15% down payment.
Nine of the top 10 states with the highest median down payments are in the West and Northeast. The 10 states with the lowest median down payments are in the Midwest and South.
Median Down Payment by Metro Area
The four metro areas with the highest median down payments are located in California. The Golden State has two other metros on the top 50 list, both within the top 13. Most of the top ten metros on this list with the highest median down payments are in the West and Northeast states.
The top 10 metros on the list have a median down payment of $138,345, while the total 50 have a median down payment of $71,889. The median for the top 10 metros listed is higher than any state’s median down payment, while the median for all 50 metro areas listed is higher than all but seven states. Only five of the metro areas listed have a median down payment lower than their state’s median down payment: Buffalo, New York, Pittsburgh, Cleveland, Detroit, and St. Louis.
What Percent Down Payment Do You Need on a House?
There are various home loans to choose from when buying a house, including conventional loans, loans for unique properties, and loans for rural areas. The down payment for most loans ranges from 3.5%–20% of the house’s purchase price. Some loans, such as a VA loan, don’t require a down payment for qualified buyers.
FHA Loan
A Federal Housing Administration (FHA) loan means that the FHA insures the loan, which allows the lender to offer you a better deal, according to the U.S. Department of Housing and Urban Development (HUD). FHA loans offer benefits, including low closing costs, easy credit qualifying, and down payments as low as 3.5% of the purchase price.
Conventional Loan
Conventional loans are loans that are not part of specific government programs. According to the Consumer Financial Protection Bureau, they typically have fewer fees than FHA loans but can be more challenging to obtain. Any down payment lower than 20% for a conventional loan typically requires mortgage insurance.
Conventional loans may be conforming loans or non-conforming loans. Nonconforming loans include a variety of loans, such as loans for properties with nonstandard features. Conforming loans are defined as having maximum loan amounts set by the government.
VA and USDA Loans
VA loans are an option for veterans, active duty military members, and eligible surviving spouses. The benefits of a VA loan include low interest rates, limited closing costs, and no required down payment. Some lenders may still require down payments for borrowers of VA home loans, according to the U.S. Department of Veterans Affairs (VA), but the VA doesn’t require a down payment.
U.S. Department of Agriculture (USDA) loans are for qualified applicants who want to own a home in eligible rural areas. Like a VA loan, there is no down payment required.
Tips for Saving for Your Down Payment
Saving up for a down payment can feel like a daunting task. The American Bankers Association offers recommendations for home buyers on saving up, including the following:
- Develop a budget: Calculate how much you need for your down payment. The down payment can range from 3.5%–20% of the purchase price of a home, depending on your loan. Determine how much you’ll be able to save each month and how long it will take to save up your down payment. You can also identify spending areas where you can cut back.
- Save in a separate account: Create a separate account to deposit your down payment savings. It reduces the temptation to take out that money if you’re tight on cash.
- Research state and local home-buying programs: Several states have first-time homebuyer assistance programs, as do some counties and local governments. The benefits of these programs include housing discounts and down payment loans or grants.
Down Payment Assistance Programs
Numerous down payment assistance programs are available at the national, state, and local levels. The U.S. Department of Housing and Urban Development (HUD) has a resource listing state-based assistance programs. Other programs include the following:
- The Home Ownership Council (HSA) offers two down payment assistance funds, the BIPOC Donor Restricted Fund and the LMI Donor Restricted Fund. The BIPOC fund is for first-time homebuyers who are black, indigenous, or people of color. The LMI fund is for low-to-moderate-income first-time buyers.
- The Chenoa Fund is an assistance program open to all homebuyers and doesn’t have income limits.
- Bank of America offers a Down Payment Grant program that can grant up to 3% of the home purchase price, up to $10,000, in select markets.
This is a small sample of the numerous down payment assistance programs available.
Full Data
The following complete data set shows the median down payment for all three groups we analyzed. For all homebuyers, we assumed a median down payment of 15%. For first-time buyers, we assumed a median down payment of 8%. We assumed a median down payment of 19% for repeat buyers. These numbers came from NAR’s profile of buyers and sellers.
Expert Tips and Insights
We turned to a panel of experts to learn about their observations of the housing market and what aspiring homeowners can anticipate this year. Read their tips and insights below.
What advice do you have for first-time homebuyers looking to save for a down payment?
Some ideas for saving for a down payment as a first-time homebuyer are: establish a clear savings goal (for example, $50,000), automate transfers to a dedicated savings account, and cut down on unnecessary expenses. Furthermore, the borrower should look into first-time buyer programs for assistance, and maintain a strong credit score for better mortgage rates. An example first-time home buyer program from Texas can be found here: https://www.tsahc.org/homebuyers-renters/first-time-home-buyer-grants.
Are there common mistakes people make when saving for a down payment, and how can they be avoided?
Many people save too little for their down payment and are surprised by their home-buying costs. It’s important to factor in all related expenses, not just the down payment, involved in buying a home. Closing costs can be another 3-5% of the loan amount, and some banks require a liquidity buffer of 3-6 months of mortgage payments.
What role does credit score play in the home buying process, and how can individuals work to improve it as they save for a down payment?
The credit score determines both whether the a potential home buyer is eligible for a mortgage and the interest rate on the mortgage. To improve their credit score, first-time home buyers should focus on paying bills on time and reducing outstanding debts especially when they are preparing to apply for a loan. Finally, potential buyers should check their credit record for any errors and mistakes, and call the credit bureaus to fix them before applying for a mortgage.
What types of loans are accessible for individuals looking to purchase a home, and what guidance would you offer to help them navigate their choices?
Beyond the standard conventional mortgages, other types of mortgages include the FHA mortgage, which has lower down payment requirements, the VA mortgage for veterans and service members, and USDA loans for rural home buyers. Some lenders have special programs such as for physician residents or international homebuyers. Potential borrowers should shop multiple lenders and discuss the available mortgage types to find the one that best fits their needs.
David Zhang is an assistant professor of finance at the Jesse H. Jones Graduate School of Business at Rice University. His research focuses on real estate finance and household finance. He graduated with a Ph.D. in business economics from Harvard University/Harvard Business School and a B.A. in economics and mathematics from Amherst College. Before starting graduate school, David was a research assistant at the Federal Reserve Bank of Boston in its Consumer Payments Research Center.
What advice do you have for first-time homebuyers looking to save for a down payment?
First-time homebuyers should consider how much they can borrow, what mortgage loans suit their needs and budgets, and how long they expect to own the house in order to realistically evaluate the necessary down payment and how long it will take to save it. Loan programs have different down payment requirements, some quite small, but sellers often choose purchase offers with the highest cash down, if the price and other terms are equal. A down payment of 20% or more eliminates the need for private mortgage insurance, which reduces monthly loan payments. For these reasons, would-be buyers should build flexibility into the amount saved as a down payment. There is no “one size fits all” for down payments.
Saving for a down payment requires fiscal discipline. Money ordinarily spent must be saved instead. A person who eats out often might have to cut back. The owner of an old car may have to drive it a few more years. Exotic vacations cost money that could go to a down payment. Changing one’s spending behavior can be very difficult. Persons saving to buy a home must keep their eyes on the prize when temptations beckon.
At the risk of being blunt, I’ll put it this way: Those without the discipline to save may not be ideal candidates to borrow money for a house. If you squander a few contributions to your down payment fund on a beach weekend, you can catch up later. But if you buy a home and miss mortgage payments or don’t pay property taxes, you can lose your house, everything you invested in it and ruin your credit rating.
Segregate your down payment savings from other funds so you won’t be tempted to touch it. Make it a habit to contribute regularly. Set goals for each quarter and calendar year. If you fall short, consider a second job (Uber driver, part-time retail, tutoring, whatever) to earn a bit more. Tell your friends what you’re saving for so they don’t encourage you to spend impulsively.
Big goals require big efforts. Buying a home is a major financial and lifestyle goal and usually doesn’t happen without commitment and discipline.
What role does credit score play in the home buying process, and how can individuals work to improve it as they save for a down payment?
Credit scores are vital for getting a home mortgage on good terms. A person with a low credit score will pay a higher interest rate on his mortgage than someone with a high score. Since mortgages can last up to 30 years, a higher interest rate ends up costing more every single month, amounting to thousands of dollars more over the loan term. That money could have bought furniture, appliances, landscaping, or other home improvements.
Moreover, very low credit scores can disqualify a consumer from getting a mortgage loan at all. When your score hovers below 650 or so, lenders consider you a poor credit risk. It’s essential to know your credit score and keep it as high as possible.
By law, every consumer is entitled to one free credit report annually, available from the website annualcreditreport.com. Order yours and study it for accuracy. Many credit reports contain errors and consumers may request removal of inaccurate information.
Close credit accounts you’re not using. Don’t open new revolving accounts or shop for a car loan when you’re in the process of getting mortgage pre-approval or applying for a mortgage. Pay all revolving accounts on time, not late. Avoid spending your maximum credit limit on any account. The more credit available to you, whether used or not, the riskier a customer you may seem to a lender.
What types of loans are accessible for individuals looking to purchase a home, and what guidance would you offer to help them navigate their choices?
Mortgage loans are like restaurant menus — they vary depending on the type of restaurant, the items served, the price, and the service. Loans are available from banks, non-bank lenders, government agencies and private individuals. They can be offered with market interest rates, discounted initial interest rates, or interest rates that are “bought down” with borrower- or seller-paid fees. Loans can be as short as 5-7 years or as long as 30. Lenders revise loan terms and conditions regularly, in response to economic and market forces, consumer preferences and government regulations. None of this is intuitive. Failing to understand one’s loan obligations has serious consequences, including penalties, extra costs and potential loss of the property in foreclosure. A first-time homebuyer should consult with a banker or mortgage broker and have loan options and terms carefully explained before committing to a home purchase. If anything is unclear, ask questions. Read any disclosures you are given and ask questions about those, too.
In navigating choices, my advice is this: (1) be cautious about the amount borrowed, and (2) borrow only if you’re highly confident you can repay the loan under circumstances that are reasonably foreseeable in your own life. For example, a single professional in a job with predictable salary increases might feel comfortable with a loan whose payments are 35% of income but a couple with two working adults planning to have children might find themselves navigating parenthood with one income, so they should consider basing what they borrow on less than they earn together. The buyer of a fixer-upper property shouldn’t take on uncomfortably large mortgage payments leaving insufficient cash flow for home renovations. Excitement about homeownership makes it easy to overlook unglamorous but necessary costs like new roofs, electrical and plumbing work, lawn care, extermination, and major appliance repair/replacement. My advice is to look at homebuying and homeownership as a continuum, not as a once-and-done transaction.
Homeownership is a journey, not a destination. The journey involves planning, preparation, explanation, evaluation, legal contracts and ongoing commitment and effort. Down payments and mortgage loans are key steps in the process but first-time homebuyers have no prior experience with them. Unfortunately, schools don’t teach students how the property market and home mortgages work, how consumers can achieve homeownership, or homeownership’s role in wealth building or in the national economy. Saving a down payment is important but by itself it is insufficient preparation for buying a house. I encourage first-time buyers not to rush into a property purchase without considering the financing options available and their realistic ability to manage post-purchase commitments.
Andrea “Lee” Negroni is a mortgage regulatory and consumer finance attorney, author of four successful books on mortgage lending and an adjunct associate professor of law at American University’s Washington College of Law, where she began teaching Consumer Financial Services Law in 2012. She is a Key Author for Thomson Reuters/West Publishing, publisher of her multi-volume treatise, Residential Mortgage Lending: State Regulation Manual (in print and on Westlaw): her articles on consumer credit have appeared in Mortgage Banking, The National Mortgage Broker, The Banking Law Journal, Scotsmans Guide, Servicing Management, National Mortgage News, WalletHub, and other publications. She earned her law degree at Columbia Law School and is a retired member of the District of Columbia and Florida Bar Associations.
H. Jon and Judith M. Runstad Endowed Professor and Chair of the Runstad Department of Real Estate
University of Washington
What advice do you have for first-time homebuyers looking to save for a down payment?
First-time homebuyers should do some research and plan carefully. How much can they afford to borrow and, given that constraint, how much do they feel comfortable borrowing given their other expenses? Are there likely to be affordable houses available with the right characteristics in the right location at the right time?
Are there common mistakes people make when saving for a down payment, and how can they be avoided?
Not planning carefully can mean that they have not saved enough when the time comes to buy a house. Another mistake is raiding retirement accounts to pay for the down payment. Many households are not saving enough money for retirement and should not touch those accounts.
What role does credit score play in the home buying process, and how can individuals work to improve it as they save for a down payment?
Low credit scores can cause two problems. The first is that they can prevent a household from getting loans from certain sources. The second is that they can result in higher interest rates, significantly increasing the cost of borrowing.
What types of loans are accessible for individuals looking to purchase a home, and what guidance would you offer to help them navigate their choices?
There is a lot of information available online about mortgage options for first-time buyers. State housing finance agencies are important sources of lower-cost financing that might be overlooked. See https://www.ncsha.org/housing-help/ to find the agency in each state.
Steven C. Bourassa is H. Jon and Judith M. Runstad Endowed Professor and Chair of the Runstad Department of Real Estate in the College of Built Environments at the University of Washington. He also serves as Director of the Washington Center for Real Estate Research at the University of Washington. Previously, he served as department chair at Florida Atlantic University, the University of Auckland, and the University of Louisville, where he was KHC Real Estate Research Professor. His research focuses on urban housing and land markets and policy, covering a range of topics including housing tenure, residential property valuation, property taxation, housing affordability, low-income housing policy, community land trusts, and public land leasehold. He has published his research in numerous real estate and related journals, such as the Journal of Housing Economics, Journal of Real Estate Finance and Economics, Journal of Real Estate Research, and Journal of Urban Economics, as well as Real Estate Economics, Regional Science and Urban Economics, and Urban Studies. His co-edited book, Leasing Public Land: Policy Debates and International Experiences, was published by the Lincoln Institute of Land Policy. Dr. Bourassa is on the editorial boards of seven real estate journals. He is a Fellow of the Weimer School of Advanced Studies in Real Estate and Land Economics and a member of Lambda Alpha International. He received the Research Achievement Award as well as the Service Award from the International Real Estate Society, of which he is a past President. He is currently Treasurer of the American Real Estate and Urban Economics Association. He holds a Ph.D. in city and regional planning from the University of Pennsylvania.
What advice do you have for first-time homebuyers looking to save for a down payment?
Start saving as early as possible. If you hope to buy a house in 5 years or later, then put your money into a mutual fund that tracks the S&P 500 to maximize your return over the long term.
Are there common mistakes people make when saving for a down payment, and how can they be avoided?
It is important to target the date for home purchase, and plan accordingly. Make sure that you are placing that money into a separate account using a specific savings goal that maximizes earnings given their time horizon. Many people save money in their checking account or a low yield savings account, which slows down their progress.
What role does credit score play in the home buying process, and how can individuals work to improve it as they save for a down payment?
Having a high credit score ensures that you can get the lowest mortgage rate possible. If someone’s credit score is too low, it can prevent any offer of any mortgage. Using credit cards helps build credit, but consumers should attempt to pay off credit cards monthly. Carrying a high balance can hurt their credit scores.
What types of loans are accessible for individuals looking to purchase a home, and what guidance would you offer to help them navigate their choices?
New Home buyers should investigate FHA loans as well as conventional loans. FHA loans may only require a 3% down-payment. Borrower’s should keep in mind that if they have a down payment lower than 20%, they may have to pay mortgage insurance as well. However, the opportunity to purchase a home sooner might pay off in a market that is experiencing rapid appreciation. Once a homeowner has 20% in their home, then can often refinance and get rid of mortgage insurance.
Dr. Gary Painter holds the BEARE Chair in Real Estate and serves as the Academic Director of the Center for Real Estate at the University of Cincinnati. He also serves as the Director of the Homelessness Policy Research Institute. Dr. Painter received his PhD in Economics from the University of California, Berkeley, and his undergraduate degree in Quantitative Economics and Decision Sciences from the University of California, San Diego.
Kristen Haseney, Esq.
Assistant Extension Professor
University of Connecticut’s Center for Real Estate and Urban Economic Studies
What advice do you have for first-time homebuyers looking to save for a down payment?
Save as much as you can, and if you have the ability to, try to save for paying closing costs, too, Check to see if your state offers a first-time homebuyers savings account program. Some states offer special savings accounts to help first-time homebuyers which may provide a state tax benefit for money deposited up to a certain limit. You will be held to any requirements and restrictions under the program, so be sure to check on what those are first. You can also check with your local Housing Finance Authority to see if they have downpayment assistance or other programs to help you obtain a loan or purchase a home. Both usa.gov and hud.gov have information on homebuying and in particular, resources for first-time homebuyers, including links to resources available by state.
Are there common mistakes people make when saving for a down payment, and how can they be avoided?
A common mistake is assuming you’ll automatically remember to save, but then forgetting to actually set money aside. It’s easy to spend your savings when you see money in the bank, but you can set yourself up with a separate savings account at a bank, and go into the bank, or log in online, and deposit on a regular basis. Alternatively, if available through your employer, you can have your employer direct deposit a fixed amount of your paycheck into an account dedicated to saving for your home’s down payment. Another common mistake is not setting aside enough money for the down payment. It’s always better to have more available for a down payment rather than less. The larger the down payment, the smaller your mortgage loan can be, which can save you money in the long run since you’ll be paying interest on that lower loan amount, or sometimes lenders may be willing to offer a lower interest rate if you can pay a higher down payment up front.
What role does credit score play in the home buying process, and how can individuals work to improve it as they save for a down payment?
Credit score will impact what your annual mortgage interest rate will be. The higher the score, the lower your mortgage interest rate will likely be; the lower the credit score, the higher the mortgage interest rate and you may also be subject to additional fees. To improve your credit score, do your best to pay your debt obligations on time and in full, including student loan payments, credit card bills and other debts like car loans and rent. You can also talk to your mortgage broker or lender before applying for a loan about additional ways they recommend for you to improve your credit score based on a review and assessment of your personal financial situation.
What types of loans are accessible for individuals looking to purchase a home, and what guidance would you offer to help them navigate their choices?
There may be first time homebuyer loans or other available programs from local organizations in your area, such as from a Housing Finance Authority or similar type of organization. Work with a trusted financial professional who can help explain financial terms and break down the numbers so you know what your monthly payment will be, which can often be just as important as your mortgage interest rate. Mortgage brokers are professionals who can help you find a mortgage from a selection of lenders whom they work with, and after reviewing your personal financial situation will be able to help you identify the mortgage you may qualify for and that works within your budget. Your monthly housing payment will need to include principle, interest, property taxes and any special district taxes, homeowners insurance, private mortgage insurance if applicable, and homeowners association dues as applicable, so it’s important to have these numbers when calculating the loan you can afford to pay each month so you remain in good financial standing.
Kristen Haseney, Esq. is an Assistant Extension Professor at the University of Connecticut’s Center for Real Estate and Urban Economic Studies. She teaches Real Estate Principles and Real Estate Law, serves as the Faculty Advisor to the UConn Real Estate Society, and is Faculty Advisor for the UConn student real estate case competition team for the Cornell PropConnex International Real Estate Case Competition.
Kristen has served on several non-profits during her career, including as Vice Chair for the last 6 years for the Connecticut non-profit organization Fair Housing Association of Connecticut (FHACT) and for two years prior to that as a Member of the FHACT Board of Directors. From 2014 to 2020 Kristen was a Member of the Connecticut Mortgage Bankers Association Affordable Housing Committee and a Member of HOMEConnecticut, an Affordable Housing Steering Committee with the Connecticut non-profit organization Partnership for Strong Communities.
What advice do you have for first-time homebuyers looking to save for a down payment?
As soon as you know you’re interested in buying a house, start saving. Even if it means stashing away $20 a month, the key is to start small and consistently save. Invest your money wisely as you work towards your goal of purchasing a home. If your home-buying plans are set for the next year or two, consider keeping your savings in non-risky assets, like a savings account or short-term CDs, ensuring the security of your funds when the time comes. If you have other investments you have put away over the years remember a house is not only a home but an investment. There is nothing wrong with pulling money out of other investments if you need that extra bit of savings.
I would establish a bank that offers mortgages when choosing where to save. Being a customer can bring about additional benefits that align with your home-buying aspirations. For example, sometimes banks offer a discount on mortgage rates for existing clients.
Take the time to explore mortgage options, determine the price range of your desired house, and pinpoint the exact amount needed for a down payment. This proactive approach will set you on a clearer path towards saving what you need.
What role does credit score play in the home buying process, and how can individuals work to improve it as they save for a down payment?
Your credit score plays an important role in securing a mortgage, impacting the interest rate you’ll be eligible for. As you focus on building your savings, prioritize paying off your credit cards on time and consistently meet all your financial obligations on time. This dual strategy not only enhances your creditworthiness but also positions you favorably for a more favorable mortgage rate.
I recommend checking your credit score to gauge your financial standing. If you’ve never had a credit card or any debt, it’s possible you don’t have a credit score. In such cases, it’s important to acquire a credit card and initiate the process of building your credit history. The length of time you’ve had credit is factored in to your credit score, making an early start advantageous. Always ensure punctual payment of any credit card bills to further solidify your credit profile.
What types of loans are accessible for individuals looking to purchase a home, and what guidance would you offer to help them navigate their choices?
When it comes to selecting a mortgage, the options are diverse, especially given the current landscape of mortgage rates. Fixed-rate mortgages, adjustable-rate mortgages, and interest-only mortgages are just a few of the choices available. It’s advisable to explore your options thoroughly – don’t settle for the first mortgage provider you come across. Research indicates that those who shop around (going to at least two mortgage providers) tend to secure more favorable mortgage rates.
Additionally, there are numerous government programs designed to assist individuals in achieving homeownership. I recommend identifying programs for which you may qualify and assessing their suitability for your situation. Some of these initiatives feature significantly smaller down payment requirements compared to standard mortgages, making homeownership more accessible for those struggling to gather a 20% down payment. For instance, FHA mortgages allow for a 3.5% down payment.
However, it’s essential to bear in mind that a lower down payment often translates to a higher monthly payment. The key takeaway here is that in the realm of mortgages, there’s no getting something for nothing – careful consideration of your financial circumstances is crucial.
Dr. Wilkoff is an assistant professor of finance at the University of Nevada, Reno. He received his PhD, in Finance and Real Estate, from the Haas School of Business at UC Berkeley. He joined the faculty of University of Nevada, Reno in 2020. After graduating from UC Berkeley, he worked as a financial economist at the U.S. Securities and Exchange Commission. Following the SEC he worked as an associate at Cornerstone Research, an economic litigation consulting firm. Prior to working at UNR, he was a visiting faculty at Penn State.
Methodology
To determine the median down payment by state, we utilized November 2023 median home sale values sourced from Redfin for single-family homes. We assumed a 15% down payment for all home buyers, based on data from the National Association of Realtors. For first-time homebuyers, we assumed an 8% down payment, while repeat homebuyers were assumed to make a 19% down payment. The same methodology was applied to calculate median down payments for metropolitan areas, assuming a 15% down payment across the board.
Questions about our study? Please contact the author here.
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