How Much Is the Typical Homebuyer’s Down Payment in 2024?

Is 2024 a buyer’s or seller’s market for houses? According to the latest Redfin data, down payment amounts hit a record high of $67,500 in June.

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If you’re in the market for buying a new house, you need to understand how this affects your buying strategy. Here is an overview of the typical down payments in different regions and savings tips for people who need a little extra to match current conditions .

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Typical Homebuyer’s Down Payment

At $67,500, the median down payment for U.S. homebuyers is up 14.8% compared with the previous year. Down payment amounts have continued to increase over the past 12 months, outpacing the increase in home prices, which were up by just 4% for the same period, according to Redfin data through June.

Down payment in terms of percentage of the purchase price is also on the rise. The median down payment percentage stands at 18.6% of the purchase price — the highest level in over a decade.

The reason for these increases? Home prices continue to rise across the United States, requiring higher down payments in most markets and leading to higher mortgage rates for buyers. In June, the 6.92% average mortgage rate was one of the highest in the past two decades.

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Regional Differences

Where you live plays a significant role in determining the typical down payment amount. Every housing market is different, so it’s important to take regional factors into consideration when planning your homebuying strategy. Not every market requires you to put 20% down, especially if you’re using an FHA or VA loan.

Here are some examples to demonstrate how various metro areas can have significantly different down-payment conditions.

• Metros with the highest median down-payment percentage: San Francisco (25.8%); San Jose, California (25.7%); Anaheim, California (25%).
• Metros with the lowest median down-payment percentage: Virginia Beach, Virginia (3%); Detroit (6.8%); Jacksonville, Florida (8.6%).

Saving Tips for Down Payments

If you don’t quite have enough for a down payment in your housing market, take some time to plan out your strategy for getting there.

• Set a specific goal and timeline: Use free mortgage planning calculators online to figure out exactly how much you need to save for a down payment. By having a dollar figure as a target, it makes it easier to plan and stay motivated toward reaching your goal.
• Use a separate savings account: Keeping all of your money in the same place makes it harder to save for a down payment because you may be tempted to withdraw it for other expenses and it’s more difficult to track growth. Establishing a separate account keeps you more focused on saving and gives you a boost as you continue to see the number grow.
• Automate your savings strategy: Set up regular transfers from your checking account to your savings account every month so you don’t forget to contribute. Consistency is the key to building savings, and automating the process helps you stick to your plan.
• Reduce your monthly expenses: Make sure you’re tracking expenses like subscription services, entertainment costs and eating out. Many of these expenses are not essential and can be cut down to make more room for your savings budget. If you’re tempted to spend more than you should on unnecessary expenses, increase your automated savings transfer amount to cover these costs.
• Explore down-payment assistance programs: You might have thought that 20% was the down-payment standard, but many housing markets require much smaller amounts. State and local programs often provide financial resources and assistance for first-time homebuyers, so contact your local FHA or VA office to learn more about how they can help you afford a lower down-payment amount.

By making some smart changes to your savings strategy, you can reach your down-payment goals. The United States might be witnessing record high down payments, but this growth won’t last forever. Do what you can to improve your financial situation right now so you can take advantage of future market shifts.

This article originally appeared on GOBankingRates.com : How Much Is the Typical Homebuyer’s Down Payment in 2024?