Average Homebuyer Put Down $42,000 as a Down Payment

The average homebuyer put down $42,375 as a down payment in January, marking the lowest amount in close to two years.

According to Redfin, this is 35% lower than the average down payment during the high of the housing market in June, but still at least 30% higher than levels before the coronavirus pandemic. However, this is the third consecutive month of the average down payment dropping. The median down payment in January represented 10% of the home’s price, down from 13.6% in January 2022.

Despite the market still suffering from low inventory, high mortgage rates are deterring some would-be buyers, generally leading to less competition, and thus, buyers are less likely to put more down. Additionally, the percentage of all-cash purchases reached a nine-year high. The report found that 32.1% of all home purchases were all-cash, an increase of 2.4% year over year. The number of buyers using both FHA and VA loans also rose. For FHA loans, 16% of buyers used one, an increase of 2.7% year over year, while 7.5% of buyers used a VA loan, an increase of 1.4% year over year.

In Pennsylvania, homebuyers put significantly less of a down payment than the national average. In Philadelphia, buyers put down $21,750, representing 8.8% of the home purchase price and a decrease of 14.4% compared to January 2022. In Pittsburgh, homebuyers put down just $12,500 on average, representing 5% of the home purchase price and a decrease of 19% year over year. Pittsburgh had one of the lowest percentages of down payment in the country. However, all-cash purchases were up in both metros. In Philadelphia, 37.4% of purchases were all-cash, up 7% year over year, while 21.5% of purchasers used an FHA loan and 3.4% used a VA loan. In Pittsburgh, 33.4% of home purchases were all-cash, up 9.5% year over year, FHA loans made up 19.4% of purchases and VA loans represented 6.2% of purchases.