“As inventory recovers, the housing market is very slowly tilting toward more balance between buyers and sellers. But down payments are still high, hitting an annual record in 2024,” said Danielle Hale, chief economist at Realtor.com. “Today’s home sales are skewed toward higher-end homes, and this means larger down payments from more financially prepared, high-earning buyers as entry-level and lower-earning buyers sit out.”
How can buyers afford to put more down?
Buyers tapped into accumulated savings and home equity to afford larger payments. During the pandemic, the personal savings rate surged to over 30% of disposable income — far above the pre-pandemic average of 6.5%. Though savings have since declined, many households retained enough reserves to bolster down payments.
Existing homeowners also leveraged near-record equity when trading up. The median down payment in 2024 was more than double that of 2019, while the average percentage of the purchase price paid upfront rose by over 3 points.
The market’s shift toward pricier properties further inflated down payments. Sales of homes priced above $750,000 grew 7.4% in 2024, while transactions below that threshold fell 9.3%.
Modest down payments — often used by first-time buyers or those with government-backed loans — also increased but remained below 2022 peaks.
The 30th percentile down payment in Q4 2024 was $8,200, up 6.5% year-over-year, but down from a peak of $10,300 in the second quarter of 2022.
“As mortgage rates ease, a more diverse set of buyers, in terms of budgets, will likely enter the market, and the incentive to minimize their home loan will soften,” Hale said. “However, if for-sale inventory fails to keep up with increased buyer demand, down payments could climb once again as the result of increased competition.”
Analysts expect the trend of elevated down payments to persist in 2025, given continued high mortgage rates and limited starter-home supply.
