$200K for a down payment in Nashville? Why Zillow says homebuyers need this to comfortably afford an average-priced home

An alarming new analysis by Zillow has revealed that homebuyers making the median income in the United States need to put down nearly $127,750, or 35.4% to comfortably afford a home valued at about $360,000.

That same home would have been affordable with no money down five years ago, when mortgage rates were hovering just above 4% and the typical home was worth about 50% less, Zillow said in a news release.

"The enormous gap between the down payment needed now and five years ago underscores how the pandemic fueled a scorching-hot housing market, and why the rise in mortgage rates in the time since has cooled the market," said Zillow.

"Stubbornly high mortgage rates have pushed both buyers and sellers to the sidelines. With so few homes for sale, competition is stiff among the remaining buyers."

Homebuyers in Nashville, where the average home is valued at $446,180, require a staggering down payment of $203,325 or 45.6 %, according to Zillow. That's a 59% increase from the typical down payment a U.S. homebuyer would need. In order to save up for the necessary down payment in Nashville, it would take homebuyers making the median income nearly 17 years.

Homebuyers could put down a typical payment of 20% on a home — in Nashville that payment would be $89,236 for an average-priced home — however, the monthly payments would be expensive. According to Zillow, the necessary down payments included in the analysis are what homebuyers would need to pay in order to make affordable monthly mortgage payments, meaning no more than 30% of a household's income in that specific area.

The down payment required in Nashville pales in comparison to other cities across the country. California leads the country for most expensive down payments with New York and Washington falling close behind. In the Golden State, down payments can reach up to six figures, for example in San Jose, where the required down payment is $1,320,275 or 35%.

On the other hand of the affordability spectrum are cities like Birmingham, New Orleans and Cleveland, where down payments are less than $100,000.

"Down payments have always been important, but even more so today. With so few available, buyers may have to wait even longer for the right home to hit the market, especially now that buyers can afford less," said Skylar Olsen, a chief economist at Zillow. "Mortgage rate movements during that time could make the difference between affording that home and not."

"Saving enough is a tall task without outside help — a gift from family or perhaps a stock windfall. To make the finances work, some folks are making a big move across the country, co-buying or buying a home with an extra room to rent out," Olsen added. "Down payment assistance is another great resource that is too often overlooked."

Top 10 cities with the highest down payments

1. San Jose, Calif. ($1,320,275)
2. San Francisco, Calif. ($887,656)
3. Los Angeles, Calif. ($780,203)
4. San Diego, Calif. (723,527)
5. New York, N.Y. ($494,795)
6. Seattle, Wash. ($462, 095)
7. Boston, Mass. ($432,875)
8. Riverside, Calif. ($358, 926)
9. Sacramento, Calif. ($337,769)
10. Miami. Fla. ($316,270)

Top 10 cities with the lowest down payments

1. St. Louis, Mo. ($10, 773)
2. Birmingham, Ala. ($19,406)
3. Detroit, Mich. ($24,132)
4. Indianapolis, Ind. ($27,570)
5. Memphis, Tenn. ($30,852)
6. Oklahoma City, Okla. ($31, 331)
7. Cleveland, Ohio ($31,551)
8. New Orleans, La. ($46,138)
9. Louisville, Ky. ($46,869)
10. Cincinnati, Ohio ($59,573)

Diana Leyva covers trending news and service journalism for The Tennessean. Contact her at Dleyva@gannett.com or follow her on X, the platform formerly known as Twitter, at @_leyvadiana