The Average Down Payment on a House Isn’t as High As You Think — Here’s Why

Young couple buying a new house.
valentinrussanov /

With U.S. homes selling at record prices in 2022, many buyers face much bigger down payments than they would have in years past simply because they are putting money down on more expensive houses. The good news is, down payments still might not be as high as you’ve been led to believe.

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A survey conducted earlier this year by the National Association of Realtors found that nearly half of respondents think they need a down payment of at least 16% of the purchase price. One in 10 think they need 20% or more. In reality, the average down payment for first-time home buyers was only 7% in 2021, and the average for repeat buyers was 17%.

Misconceptions about down payments primarily come about due to bad information. While many potential homebuyers are under the impression that repeat buyers need to put at least 20% down to purchase a house, that’s simply not the case. The down payment largely depends on the lender, the home, and your financial situation. Moreover, first-time buyers can take advantage of FHA loans that let them put down as little as 3.5%.

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Lower-than-expected down payments can make it more financially feasible for many Americans to buy a home, but that doesn’t mean it will be cheap or easy. This is especially true now, during a period when home prices have been surging since the beginning of the COVID-19 pandemic.

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The typical home value in the United States is currently $349,816, according to Zillow. That’s up 20.7% over the past year.

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However, there could be hope on the horizon. Rising interest rates have already led to softening in some housing markets as many potential buyers choose to sit on the sidelines until rates come down again. Meanwhile, prices could soften further as more builders ramp up development to meet demand.

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About the Author

Vance Cariaga is a London-based writer, editor and journalist who previously held staff positions at Investor’s Business Daily, The Charlotte Business Journal and The Charlotte Observer. His work also appeared in Charlotte Magazine, Street & Smith’s Sports Business Journal and Business North Carolina magazine. He holds a B.A. in English from Appalachian State University and studied journalism at the University of South Carolina. His reporting earned awards from the North Carolina Press Association, the Green Eyeshade Awards and AlterNet. In addition to journalism, he has worked in banking, accounting and restaurant management. A native of North Carolina who also writes fiction, Vance’s short story, “Saint Christopher,” placed second in the 2019 Writer’s Digest Short Short Story Competition. Two of his short stories appear in With One Eye on the Cows, an anthology published by Ad Hoc Fiction in 2019. His debut novel, Voodoo Hideaway, was published in 2021 by Atmosphere Press.
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